Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

MESSAGE FROM THE QUEEN

DOUBLE TAXATION RELIEF

The VICE-CHAMBERLAIN OF HER MAJESTY'S HOUSEHOLD reported her Majesty's Answer to the Address, as follows:
I have received your Addresses praying that the Double Taxation Relief (Taxes on Income) (Uganda), (Ukraine), (India), and (Ghana) Orders 1993 he made in the form of drafts laid before your House. I will comply with your request.

PRIVATE BUSINESS

DAWAT-E-HADIYAH BILL

Lords amendments agreed to.

Oral Answers to Questions — TRADE AND INDUSTRY

Trading Standards Officers

Mr. Gerrard: To ask the President of the Board of Trade what assessment he has made of the impact of local government reform on the work of trading standards officers.

The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin): The aim of local government reform is to improve the accountability, efficiency and effectiveness of all local government services.

Mr. Gerrard: Does the Minister accept that an increase in the number of local authorities with trading standards powers will mean their having to set up their own specialist teams to deal with specific sectors of trade? How does he intend to ensure that that does not exacerbate the current national shortage of qualified trading standards officers, and that the money will be available to provide the extra numbers required?

Mr. McLoughlin: The hon. Gentleman prejudges the Local Government Boundary Commission. That is a dangerous thing for him to do. I am aware of concern about small unitary authorities providing training standards services. However, the reform process involves extensive consultation and affords an ample opportunity for any potential difficulties to be anticipated and solutions developed. The hon. Gentleman's own borough council is a unitary authority, and perhaps he is concerned because it does not provide a good service. That would not be surprising, as it is Labour controlled.

Mr. Waller: Is my hon. Friend aware that the joint committee arrangement that enables the five districts in West Yorkshire to run a combined countywide trading standards service is regarded as successful? Does he agree that the range of expertise required to fulfil the wide responsibilities that trading standards officers have these days makes the economies of scale afforded by joint arrangements most valuable, and that that should be considered in the context of the Local Government Commission's recommendations?

Mr. McLoughlin: I am grateful to my hon. Friend. His example shows how joint arrangements can work successfully. The matter can be considered in the context of the proposals of the Local Government Commission, when the House eventually decides on them.

Mr. Nigel Griffiths: Does the Minister realise that when the Government abolished the metropolitan county councils there was a surge in consumer frauds, counterfeit goods and activities by loan sharks? Does he recall that Tory councils, such as Westminster today, have slashed their budgets for consumer protection? Will he answer the question that my hon. Friend the Member for Walthamstow (Mr. Gerrard) asked: what will he do to ensure that the 220 vacancies for professional trading standards officers are filled immediately?

Mr. McLoughlin: That is a damning indictment of Barking and Dagenham, Camden, Greenwich, Hackney, Hammersmith and Fulham, Haringey, Hounslow, Islington, Lewisham, Merton, Southwark and Waltham Forest, which are all Labour controlled. Is the hon. Gentleman saying that those authorities are incompetent in carrying out their duties?

Manufacturing (North-East)

Mr. Mandelson: To ask the President of the Board of Trade what plans he has to strengthen the manufacturing base of the north-east.

The Minister for Industry (Mr. Tim Sainsbury): My Department's policies and programmes are aimed at strengthening the manufacturing base of all regions.

Mr. Mandelson: Is the Minister aware of the high expectations among people in the north-east of the Government's new industry policy following the Chancellor's Mansion House speech last week? When the Chancellor was asked for details of that policy at Question Time last Thursday, he said that he could not pre-empt the work of the President of the Board of Trade. What would the Chancellor have been pre-empting?

Mr. Sainsbury: I hoped that the hon. Gentleman would recognise what was done for industry in the recent Budget of my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), which was much appreciated by industry. I am sure that the hon. Gentleman is also well aware of the initiatives that my Department has taken and is continuing to take in dialogue and partnership with industry to broaden and strengthen Britain's manufacturing base.

Mr. Bates: Will my right hon. Friend join me in congratulating the 50 north-east manufacturing firms that met in Middlesbrough on Monday of this week to launch the Teesside Manufacturing Challenge? Is he aware that


that excellent initiative is a self-help initiative designed to fund manufacturing apprenticeships at the excellent Teesside Training Enterprise, Ltd., which already provides similar apprenticeships for more than 600 young people in the region? Is not that further evidence, if it were needed, of the dynamism, vitality and foresight of manufacturing industry in the north-east?

Mr. Sainsbury: It is indeed, and I am happy to join my hon. Friend in congratulating the private sector on the initiative, which has the ambitious target of doubling manufacturing output and has rightly identified training as one sector which needs attention and improvement if the target is to be met.

Mr. Jack Thompson: Is the Minister aware of the vast number of skilled personnel in the northern part of the northern region who are unemployed? The result is that skills related to the shipyards, mines and heavy engineering are now decaying as there are no longer the skilled personnel to pass on their skills. That is a major problem in that part of the region along the Tyne valley and Northumberland, which is not receiving the necessary response from the Government. I accept the comments of my hon. Friend the Member for Hartlepool (Mr. Mandelson), who represents a constituency in the southern part of the northern region. Instead of Ministers making a two-hour visit to the region—which the Minister and his colleagues have done—would it not be better if they visited the region, perhaps during the recess, for two or three days or even two or three weeks to discover the truth of the northern region?

Mr. Sainsbury: I know that the hon. Gentleman is concerned about such issues. He will be aware that there has been too high a level of unemployment in that region for a long time—since before the last world war. We have discussed the issue and my hon. Friend the Minister for Energy has been to look at the position on the ground, and will be visiting the district again soon. We shall continue with a range of initiatives, about which the hon. Gentleman is aware, to do all that we can to help to provide employment opportunities for those wanting jobs in his region and throughout the north-east.

Mr. Devlin: Is my right hon. Friend aware of the high concentration of manufacturing businesses in the north-east of England that have already achieved BS5750? Is that not part and parcel of the excellent initiative that the Government have pursued in bringing one third of all inward investment to the European Community into this country? The emphasis on quality, which is now moving through north-east manufacturing business at all levels, will enable them to compete much more strongly in future.

Mr. Sainsbury: My hon. Friend is right to identify the importance of quality as one way in which we can achieve success for our manufacturing industry. He is also right to recognise the contribution to jobs in the north-east made by inward investment. That contribution will continue to be made by inward investment, because the Government believe in promoting it.

Post Office

Ms Estelle Morris: To ask the President of the Board of Trade when he expects to make a statement on the future of the Post Office.

Mr. McLoughlin: No decisions have yet been taken on the future organisation and structure of the Post Office; a statement will be made to the House once decisions have been taken.

Ms Morris: Does the Minister realise how unsatisfactory his reply is? Does he further realise that we have been waiting almost a year for the Government's plans on the future of Parcelforce and the structure of the Post Office? Does he accept that that unjustfiable delay is the worst possible environment for the Post Office to operate in? Will he take this opportunity to acknowledge that the Post Office is popular, successful and profitable, and that the best way in which he can help it is to leave it alone?

Mr. McLoughlin: It is rather typical of the Opposition to oppose any changes. They are following their usual practice of opposing the changes that we have introduced in the nationalised industries and nationalised structures over the past 14 years. It is rather a pity that the hon. Lady did not take time to praise the Post Office for the way in which it showed increased profits yesterday and announced a very good annual report.

Mr. Dover: Is not it true that the Post Office is currently constrained in its ability to invest because it has to compete with other nationalised bodies? Is not there a real risk of the sub-post office network closing because there are restrictions on what those post offices are allowed to do? Would it not be by far the best bet to opt for privatisation, when all those restrictions will be removed?

Mr. McLoughlin: I am grateful to my hon. Friend. As I have said, we are still considering several points. With regard to Post Office Counters Ltd., of the 20,000 post offices, 19,000 are in private ownership.

Mr. Malcolm Bruce: Will the Minister recognise that a new pressure group for the Post Office was launched last week called PPS—Protecting Postal Services? That pressure group has been founded because there is widespread concern about the Government's intentions in relation to the future of the Post Office. Would not it he helpful if the Minister relaxed the external financing limits so that the Post Office can invest? The Minister lifted restrictions to allow sub-post offices to develop their services. However, further delay on the ideological privatisation of the Post Office is not what is needed: what is needed is the continuation of the service that is so necessary for urban and rural communities throughout the United Kingdom.

Mr. McLoughlin: I am not quite sure what the hon. Gentleman is talking about, because 19,000 of the sub-post offices are already in private hands and therefore have no restrictions whatsoever.

Mr. Page: I congratulate the Post Office on its recent and most successful figures, but when my hon. Friend the Minister considers the future of the Post Office, will he set in place a structure that will attack the present estimated deficit of some £400 million to £500 million in losses through fraud and organised crime in respect of the distribution of benefits and pensions?

Mr. McLoughlin: I am grateful to my hon. Friend. His work on the Public Accounts Committee provides him with extra experience of these areas. The Government remain committed to the maintenance of a nationwide


network of post offices. It would not be appropriate at this time to prejudice contractual negotiations between Post Office Counters Ltd. and Government Departments. However, total Government business transacted by Post Office Counters Ltd has increased over the past three years and is expected to increase this year.

Mr. Cousins: Does the Minister accept that it is a disgrace that, after a year, no conclusions have been reached and t here have been no statements to Parliament? How does he propose to celebrate the first anniversary of the Post Office review—with the price hikes, loss of investment and export business and the loss of tens of thousands of jobs which the chairman of the Post Office predicted yesterday? Is not the Government's policy on the matter now a combination of fumble, fright and fat fees for consultants while the British people, the British Post Office and British business suffer?

Mr. McLoughlin: No.

Sir Michael Grylls: Does my hon. Friend agree that the best way to improve the service from the Post Office is to encourage competition? What plans does my hon. Friend have to do just that?

Mr. McLoughlin: I am grateful to my hon. Friend. As I said earlier, we are considering a number of options in the review. Some of the points that my hon. Friend has made will be very much borne in mind.

Warship Yards

Mr. Clelland: To ask the President of the Board of Trade what plans his Department now has to ask the European Commission for access to the intervention funds for British warship yards; and if he will make a Statement.

Mr. Sainsbury: I asked Commissioner van Miert on 26 May to reconsider the circumstances under which British warship building yards might become eligible for the shipbuilding intervention fund.

Mr. Clelland: It is regrettable that the President of the Board of Trade cannot be here to deal with this matter and we sympathise with him about his illness—[HON. MEMBERS: "Oh!"]My hon. Friends must be patient. 'There are thousands of people in this country whose health has also suffered as a result of 14 years of Tory Government, but they are not being looked after quite as well as the President of the Board of Trade.
Is the Minister aware that what the people of Tyneside now want from him is direct action? He should get across to Brussels, speak to the Commission and obtain the preventive medicine which is needed to relieve the stress on the workers of Swan Hunter. As the Minister's right hon. Friend the President of the Board of Trade will no doubt now confirm, it is far better to prevent collapse in the first place than to have to live with the hope of recovery afterwards.

Mr. Sainsbury: I am grateful for what the hon. Gentleman said about my right hon. Friend—I am only sorry that he ruined it by what he said subsequently. As for Swan Hunter's eligibility for the shipbuilding intervention fund, I wrote to the Commissioner. I have not yet had a reply to my letter. I hope that it will be a reply in the affirmative. If it is not, I shall certainly be ready to go to Brussels to discuss the matter with him, because I share the

hon. Gentleman's belief that eligibility for the shipbuilding intervention fund would help the receiver in his task of finding a buyer for the Swan Hunter yard.

Mr. Wilkinson: Has not Swan Hunter had a unique capability among British yards over the years in being dual-capable, inasmuch as, in addition to building some of the very best warships that the Royal Navy has ever received, it has built geographic survey vessels for the Antarctic, cable-laying ships and auxiliaries? In those circumstances, how can the Commission of the European Community rightfully deny intervention funding to that yard? Is it not about time that Her Majesty's Government did what is in the interests of the British shipbuilding industry and the British nation, rather than always acting at the behest of Brussels?

Mr. Sainsbury: I am sure that my hon. Friend would like the Commission to exercise restraint in giving state aid in other countries of the Community. Quite rightly, the shipbuilding intervention fund is regarded as a state aid and is, therefore, controlled under the seventh directive. If we were to go against the arrangements, we should be doing what we sometimes rightly complain about other countries doing.
My hon. Friend will also be aware that the arrangements under which warship building yards are not eligible for the shipbuilding intervention fund were approved by the Commission in 1985 because we had considerable state aid to the shipbuilding industry at the time, which we agreed with the Commission on the understanding that warship building yards would not be eligible for the shipbuilding intervention fund. I have approached the Commissioner now because I believe that the circumstances have changed sufficiently to justify reconsideration of that ruling.

Mr. Bell: The House will welcome the Minister's reply to my hon. Friend the Member for Tyne Bridge (Mr. Clelland). The Minister will know that there are those who wish to buy Swan Hunter's yard. Will he confirm that Swan Hunter has a role to play in the building of warships and merchant vessels? If he could see Commissioner Karel van Miert very early on, he would give the country and the people of the north-east the impression that his Department is serious, anxious and positive about the matter.

Mr. Sainsbury: As the hon. Gentleman knows, the receiver has received a number of strong expressions of interest from reputable parties for the Swan Hunter yard. We are keeping in the closest possible touch with the receiver and we will certainly do all that we can to help him in his task of finding a buyer. I recognise that the Swan Hunter yard has had great achievements in the past and has great skills in the present which could be used in warship and merchant shipbuilding.

Trade Trends

Mr. Dickens: To ask the President of the Board of Trade if he will make a statement on recent trends in (a) exports and (b) imports; and if he will make a statement.

Mr. McLoughlin: In the past 12 months, export volumes of goods have risen by 6–6 per cent., while imports have risen by only 5 per cent. This sustains the marked improvements in our export performance in recent years,


and I know that United Kingdom exporters will build on those gains as they reap the benefits of our improved competitiveness.

Mr. Dickens: Does my hon. Friend believe that those encouraging figures are based on the advantage that the United Kingdom has from the floating pound, or is it possible that some British companies are selling abroad at a favourable price because of the shallow domestic market—in other words, dumping? If that is the case, I would be a very happy man. We would be giving many nations a taste of their own medicine, which the textile companies in my constituencies have received for many years.

Mr. McLoughlin: I am not sure whether I would go along with my hon. Friend in respect of United Kingdom companies dumping. United Kingdom companies are winning export markets in very competitive areas, and I am sure that we all welcome that.

Mr. Purchase: Despite the Minister's assurances on exports, is not it true that, although there has been a welcome start of a recovery in manufacturing, imports are set to grow at twice the rate for exports that was given by the Minister? Is not that due entirely to the Conservative party's antipathy to manufacturing and the wipe-out of capacity that has taken place during the past 13 years of their rule?

Mr. McLoughlin: It will come as no surprise to the hon. Gentleman that I neither follow nor recognise his figures. The hon. Gentleman talks about a reduction in manufacturing. He represents a Wolverhampton constituency, and will remember well that British Steel Bilston closed down under the last Labour Government.

Mr. Batiste: Is not one of the most important factors in our improving export performance the fact that, over the past decade, we have had the lion's share of inward investment into the EC? Is not it time that we acknowledged that the best companies in the world believe that Britain is the best place in Europe in which to manufacture?

Mr. McLoughlin: I agree entirely with my hon. Friend. My constituency benefited from a huge inward investment of £770 million from Toyota. That investment could have gone anywhere in Europe, but Toyota chose the United Kingdom because it recognised this country as the best place to invest.

Ms Short: Will the Minister admit that we have a disastrous problem in the British economy, as we are losing £1 billion on our balance of payments every week? After 14 years of Tory rule, the British economy is in deep crisis because our manufacturing—[ Interruption.]Conservative Members should not be so ignorant. These are the facts. The British economy is in deep crisis and the strategy of the Government towards manufacturing has been a disaster. The economy will not prosper unless the Government adopt an industrial strategy that will encourage long-term investment in manufacturing. Will the Minister admit that that is the truth and say whether the Government have any strategy to deal with the crisis?

Mr. McLoughlin: We had a very good debate only the other Friday about the factors contributing to Britain's

competitive advantage. Between 1974 and 1979, our competitiveness fell dramatically, and the Government have gone a long way towards improving the position.
The hon. Member for Wolverhampton, North-East (Mr. Purchase) referred to exports. Compared with the first quarter of 1993, exports of medical and pharmaaceutical equipment are up by 28 per cent; of power generation equipment by 42 per cent; of office machinery by 45 per cent; of machine tools by 47 per cent; of radar equipment by 60 per cent; and of computer hardware by 70 per cent. I should have thought that even the hon. Lady would regard that as good news.

Mr. Butcher: Does my hon. Friend agree that, of all the countries in the European Community, Britain more than any other shares with the United States a common attitude and a common policy to free trade? Does he therefore agree that Britain is uniquely placed to lead a discussion with the United States Government on the creation of a North Atlantic free trade area encompassing north America and the EEC, which would have the advantage for us of stimulating the western coasts of western Europe and for the Americans of stimulating the north-eastern seaboard of America, which is currently a depressed area?

Mr. McLoughlin: The Government believe in removing or minimising all obstacles to trade. We will certainly consider my hon. Friend's suggestion.

Consumer Guarantees

Mr. McKelvey: To ask the President of the Board of Trade if he will give the date on which he received the last representations on consumer guarantees; and when he expects to announce the results of his consultation.

Mr. McLoughlin: The last response was received in April of this year. However, the Director General of Fair Trading has embarked on a further study of consumer guarantees, and the EC Commission is also preparing a discussion paper. We have thought it best to await the outcome of these initiatives before making any announcement ourselves.

Mr. McKelvey: For heaven's sake, the DTI has been sitting on these responses since October—it has had nine months in which to consider these matters. Does not the Minister feel that British firms would gain an advantage if we had proper and effective consumer guarantees? We should then be more than able to compete with the import of foreign goods and thus do something to help our balance of trade deficit.

Mr. McLoughlin: Since April, when representations were last made, a number of matters have moved on, and we have thought it best to await the outcome of the initiatives that I described to the hon. Gentleman.

Business Regulation

Mrs. Ann Winterton: To ask the President of the Board of Trade what steps he is taking to remove unnecessary administrative and regulatory burdens on businesses.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): Departments are conducting comprehensive reviews of regulations for which they are responsible and will shortly provide me


with their candidates for repeal and simplification. Seven private sector business task forces are producing their own hit lists, which I hope will be radical and extensive.
Among many other initiatives, we are determined to force EC institutions to recognise the job-destroying effect of over-regulation from Brussels and roll back the tide of Euro-regulation.

Mrs. Winterton: Is my hon. Friend aware that regulation is stifling business? Does he agree with the Institute of Chartered Accountants, which seeks to abolish burdensome auditing requirements on small firms? Is he aware that, when businesses register for value added tax, they are sent a 180-page hook, a 20-page leaflet, a 17-page leaflet, a 14-page leaflet, a 12-page leaflet and two six-page leaflets, all of which warn of dire consequences if the contents are not fully understood? When do the Government intend to put their money where their mouth is and reduce burdensome regulations on business?

Mr. Hamilton: I congratulate my hon. Friend on her enthusiasm for the cause which I have embraced. I am most grateful to her for coming to the House today with that catalogue to demonstrate to hon. Members on both sides of the House the difficulties that small companies must endure before they can even get on with the business of trading at all. As my hon. Friend will know, there is a consultation exercise under way at present, which we hope will lead to the removal of an important but unnecessary regulation the requirement for a compulsory audit for small companies. I am most grateful to my hon. Friend for the strong support that she gives to this worthwhile cause.

Mr. McAllion: Is the Minister aware that, if the Government persist with their policy of promoting inward investment on the back of reducing what they call the burdens of labour and social costs, they will find themselves in competition with the likes of Thailand, where the social costs are so low that health and safety regulations are generally ignored and where recently more than 200 workers lost their lives in a factory fire? Does the Minister understand that although that policy may make Britain a place in which it is easy to do business, it will also make it a place in which workers' lives are held to be cheap and of no account'? Labour Members want no part of that strategy.

Mr. Hamilton: The Government are concerned with inward investment. What the hon. Gentleman and his party would produce is not only outward investment but the export of jobs. As the Member for Dundee, East, the hon. Gentleman has significant experience in these matters because, as a result of his neanderthal attitude and that of the Transport and General Workers Union, a large number of jobs that would otherwise have gone to Dundee did not go there.

Manufacturing Base

Mr. Nicholas Winterton: To ask the President of the Board of Trade what steps he is taking to prevent the erosion of the United Kingdom's manufacturing base.

Mr. Sainsbury: The success of United Kingdom industry is the primary concern of my Department and all the policies of the Department are directed towards that end.

Mr. Winterton: Although I warmly welcome my right hon. Friend's response to my question, is he aware that the United Kingdom continues to export its manufacturing base, whether in traditional industries or even in high-tech ones'? If he wants chapter and verse, I will give it to him. Does my right hon. Friend accept that the way in which the Government can improve the position of United Kingdom manufacturing industries, which are the only real source of genuine economic growth in this country, is to achieve a further modest reduction in interest rates, introduce 100 per cent. capital allowances and give my right hon. and learned Friend the Chancellor of the Exchequer every encouragement in his Mansion House speech to have a Budget in November for economic growth'?

Mr. Sainsbury: I know that my hon. Friend has great enthusiasm for manufacturing industry, but I hope that he will not entirely neglect the contributions made to employment and, indeed, exports by other aspects of British business. He made suggestions which are, as he knows, matters for my right hon. and learned Friend the Chancellor. My hon. Friend referred to exporting our manufacturing base. I am not sure to what he is referring, but I hope that he will join me in congratulating British manufacturing exporters on their achievement in increasing exports by 6·5 per cent. last year in extremely difficult world trade conditions.

Mr. Robert Ainsworth: Will the Minister accept that the Under-Secretary of State for Technology has a selective recognition of trade figures, because the deficit grew in April and May, with imports growing by 0·6 per cent. and exports falling? The basic cause of that is the size of our manufacturing base. When will the Government have some underlying strategy to improve the situation?

Mr. Sainsbury: May we be clear about exports? Total exports, excluding oil and erratics—which is the most sensible way of looking at them—were at a record level in the first quarter of this year and 6·5 per cent. higher than a year earlier. Having said that, of course we all share the objective of broadening our manufacturing base and enabling British manufacturing industry not only to increase exports but to gain a larger share of the home market.

Mr. Knapman: Will my right hon. Friend confirm that our manufacturing base will be helped by the initiative introduced by my right hon. Friend the President of the Board of Trade to cut red tape and bureaucracy? Is my right hon. Friend the Minister aware that, according to the Library, 265 new rules, regulations and directives will come from Brussels in the near future? Can we help my right hon. Friend best by supporting or by opposing those directives?

Mr. Sainsbury: My hon. Friend is right to identify excessive regulation and over-zealous application of bureaucratic rules as damaging to all industry, but particularly to small industry. My hon. Friend the Under-Secretary of State for Corporate Affairs is doing a magnificent job. We all wish him the greatest success in wielding the axe against regulations that are unnecessary, excessive or over-bureaucratic, from whatever direction they come—Whitehall or Brussels.

Mr. Bennett: Does the Minister agree that one of the most successful parts of manufacturing industry in Britain is our mining engineering equipment industry? Does he realise that it faces devastation of the home market as a result of so many rapid closures of pits? What does he intend to do to help it to win export orders, especially in eastern Europe where there is clearly a major need for mining engineering equipment?

Mr. Sainsbury: I recognise that our mining engineering industry has considerable skills. My hon. Friend the Minister for Energy has met representatives of the industry and is working closely with the industry to help it at a time when obviously there has been a reduction in demand for deep-mining equipment in Britain and internationally.

Mr. Clappison: Will my right hon. Friend join me in acknowledging the warm welcome that has been given by exporters of manufactured goods to the improvements in the Export Credits Guarantee Department scheme announced in the autumn statement and the Budget? Does he agree that those exporters who benefit from the scheme have a vital role to play in developing and sustaining our improving export trend?

Mr. Sainsbury: I am happy to agree with my hon. Friend. As he knows, the announcement in the Budget of additional ECGD support followed earlier announcements at the end of last year and a reduction in rates by the Department earlier last year. There have been successive moves to improve the service provided by ECGD to our exporters. I am glad to say that our exporters have responded magnificently to that encouragement.

Brewing Industry

Mr. Wareing: To ask the President of the Board of Trade what representations he has received alleging abuses of monopoly power within the brewery industry; what his response has been; and if he will make a statement.

Mr. Neil Hamilton: My right hon. Friend the President of the Board of Trade and I have received several representations about the brewing industry, but these have mainly been about the treatment of tenants. If the hon. Gentleman has any evidence of abuse of monopoly power or other anti-competitive practices, it is open to him to raise these with the Director General of Fair Trading.

Mr. Wareing: Is the Minister aware of the so-called white knight policy administered by Inntrepreneur estates on behalf of Grand Metropolitan breweries, which seeks not only to circumvent the Government's Beer Orders but to extinguish the rights of its tenants in the brewery trade? Indeed, every year, 9 per cent. of those pubs go into bankruptcy. An examination of the document will show that the company's practice is sheer exploitation of the tenants and a dereliction of its duty under the Beer Orders. Will the Minister carry out a full public investigation into the activities of that brewery and that scheme?

Mr. Hamilton: The Department was sent anonymously a copy of the document to which the hon. Gentleman referred. It has been examined by my officials. Following a minute examination of what it contained, they discovered no apparent breaches of the Beer Orders.
As the hon. Gentleman will know, as a result of the intervention of Ministers, which secured sympathetic

treatment of the tenants of many companies—not only the one to which he referred—we have managed to secure a significant improvement in the lot of many people who were otherwise worried about the circumstances in which they found themselves. It must be in the interests of brewers to develop a constructive relationship with their tenants. I hope that Grand Metropolitan will continue in the course of action that Ministers have urged on it.

Mr. John Greenway: Does my hon. Friend agree that, if there is one monopoly in the brewing industry that people should welcome, it is the small brewers of real ale? Does he agree that small brewers, such as Malton brewery in my constituency, provide an excellent beer for visitors to Ryedale during the summer months? If there is a problem in the brewing industry, we should address the Treasury about it to ensure that our brewers have fair and equal treatment under the tax regime affecting beer

Mr. Hamilton: I am a great personal supporter of the British brewing industry. This evening, I shall attend the launch meeting of the all-party beer group and would welcome the presence there of as many hon. Members as possible to enjoy the wonderful product, unique to this country, which offers so much enjoyment and so many employment opportunities to so many people.

Mr. Fatchett: When the price of beer has gone up above the rate of inflation, when consumer choice is still restricted and when many tenants are being pushed out of their home and business by the practices of companies such as Grand Metropolitan, why have the Government taken such a soft line with the brewers? Is the real explanation that the brewers have always been large donors to Conservative party funds and that Sir Allen Sheppard, the chairman of Grand Metropolitan. is a member of the management committee of the Conservative party? Is not this another case of the Government standing against small businesses and in favour of the vested interests that contribute to their funds?

Mr. Hamilton: I think that it is the hon. Gentleman who sounds as if he is under the influence. I doubt very much whether his evaluation accords with that of the brewers, who certainly do not think that the Government have let them off lightly. As the hon. Gentleman would know if he bothered to examine the facts, in many respects there is more competition in the industry today than before the supply of beer report. The development of independent pub chains in the industry is significant and is a consequence of the Beer Orders. Does the hon. Gentleman know, for example, of the significant reduction in the amount of beer sold through tied pubs and that recently the wholesale price of beer has diminished significantly? Perhaps one reason why the retail price of beer has increased is that pub chains and, in particular, breweries that have maintained tied pubs have greatly increased the facilities available on their premises, the costs of which must be recouped.

Mr. Ian Bruce: Having tried to implement the Monopolies and Mergers Commission report that suggested that our former regime was anti-competitive for beer, in trying to help the small brewers, surely my hon. Friend realises that the small brewers do not think that our intervention has been helpful. Will he reconsider whether


we should simply remove the Beer Orders and allow the brewers, including the small brewers, to run the market as they did previously, when it was more competitive?

Mr. Hamilton: The best thing that the Government can do for the time being is nothing. The brewing industry has been through a period of convulsion, which, as far as I can see, has not been welcomed by any party. Consequently, I am not in a position to announce that we shall review the Beer Orders. They became effective fully only last November, so it is too early to determine the full consequences. We now need a period of stability to allow the industry to settle down. In due course, further inquiries will be instituted by the European Commission when the review of the block exemption for tied pubs comes along in a few years' time. These issues will not go away, but it would not be right for the Government to stir things up yet again at this time.

Coal Subsidies

Mr. Etherington: To ask the President of the Board of Trade how many requests he has received from British Coal for a portion of the subsidy for expanding the coal market.

The Minister for Energy (Mr. Tim Eggar): My right hon. Friend and I have not received any specific requests for subsidy from either British Coal or private sector producers.

Mr. Etherington: Does the Minister accept that that is likely to he the position for the foreseeable future? Does not he understand that, in effect, this subsidy was offered merely as a panacea to Tory Back Benchers who objected to the pit closures? Was not the White Paper whose proposals included the subsidy based on efforts to thwart the many positive aspects of the Select Committee's report, which had widespread support among the population?

Mr. Eggar: The hon. Gentleman seems conveniently to ignore the Select Committee's major recommendation—that the Government should make a subsidy available to bridge the gap between the cost of British-produced coal and world import prices. That is exactly what we did. My understanding is that, at present, independent coal producers and British Coal are having discussions with the generators about the possibility of agreeing additional contracts for the sale of coal. It is clear that, until those negotiations are at an advanced stage, it will not be appropriate for the Government to get into the business of handing out subsidies. We cannot do that in an open-ended way.

Dr. Michael Clark: Does my hon. Friend agree that, following publication of the White Paper, adequate financial provision was made to assist the British deep-mined coal industry? Does he share my disappointment that none of this funding has yet been called upon? Can he assure the House that the two major generators, which are major users of fossil fuel, are not abusing their dominant position and are aware of their national responsibilities?

Mr. Eggar: I very much agree with the sentiment behind my hon. Friend's question, which concerns the clear national responsibility of generators. During the coal review, the generators made it quite clear to my right hon.
Friend and me that they believed they would he in a position to contract for additional supplies of coal. We look to them to fulfil that indication. It is clear that, at a time when they have large stockpiles—coal burn is normally low at this time of the year—it is difficult for them to contract for supplies. However, we hope that they will enter into serious negotiations in the very near future.

Mr. Caborn: Will the Minister be honest with the House and the country and admit that the Select Committee's recommendations were totally ignored in terms of the central point that the President of the Board of Trade made on 13 October—unless the market for coal is enlarged, there will be no extra sales? The Government negated their responsibility. They gave a fix to Back Benchers and deceived the country by failing to address the central question of a larger market for coal.

Mr. Eggar: The hon. Gentleman simply cannot get away with rewriting the Select Committee's report, although he tries to do so time after time. The Select Committee did not recommend a restriction on gas stations; nor did it recommend the closure of Magnox stations. The hon. Gentleman should not go around misleading the country about what the Select Committee said; he should refer to the words of its report.

Mrs. Peacock: Is my hon. Friend aware that the two generating companies are refusing to negotiate any further contracts with British Coal unless the price is well below 80p a gigajoule? Is not that ridiculous when world prices are around 120p a gigajoule? The companies are looking for huge Government subsidies. Would not those simply transfer taxpayers' money into the companies' profits?

Mr. Eggar: The issue of the exact level of the world price is very complex. [HON MEMBERS: "Oh."] There is no point in the refusal of Opposition Members to recognise the marketplace. They cannot simply pluck a figure out of the air and claim that it is the market price. It was precisely because there are different perceptions of the world market price that, about 10 days ago in the House, I answered a question by saying that we were inviting from British Coal and from the independent coal producers indications of their production costs and of what they thought the world price was. Once we have received their responses, we shall be able to enter into discussions about the appropriate level of subsidy.

Mr, Robin Cook: Does not the Minister know that, since March, British Coal has been offering extra contracts at 40 per cent. below the core contract price? At that knock-down price, the generators can produce electricity more cheaply than they can from gas, nuclear power or even imported coal available on long-term contracts. Does not the fact that the generators would still rather ask consumers to pay for electricity produced from more expensive sources provide the final proof, if any were needed, that the market is rigged against coal?
Why does not the Minister admit that the White Paper was a fraud and was never intended to save the jobs of miners at the 12 pits, but was intended to save the jobs of Ministers in the House?

Mr. Eggar: Why does not the hon. Gentleman, for once, make his position clear? Does he want to close down


the nuclear industry and the North sea oil industry and stop the development of gas-fired stations? Where does he want jobs to be lost?

Mr. Cormack: Is my hon. Friend aware that there is widespread feeling in this country that British Coal has not been as zealous in protecting the industry over which it has charge as it might have been?

Mr. Eggar: I hear what my hon. Friend says. It is because of the point made by my hon. Friend the Member for Batley and Spen (Mrs. Peacock), both today and previously, that the Government have determined, and British Coal has agreed, to go forward with the sale and lease of pits to the private sector that British Coal does not wish to continue to operate. It has already advertised nine such pits for leasing, and I understand that there has been a degree of interest from the private sector in examining further the possibility of taking them on.

Polly Peck

Mr. O'Hara: To ask the President of the Board of Trade if he will make a statement about recent discussions between his Department and the administrators of Polly Peck.

Mr. Neil Hamilton: My officials have in the past held, and continue to hold, long meetings with the joint administrators of Polly Peck International plc and their legal advisers in respect of matters arising in and about the proceedings under the Company Directors Disqualification Act 1986 currently being brought against various persons involved in the management of Polly Peck International.

Mr. O'Hara: The Minister will be aware that the rise of Polly Peck began in stolen orange groves in occupied northern Cyprus. I know from a previous answer that his Department does not keep statistics of trade with northern Cyprus, but is the Minister aware that, according to recent statistics from the so-called Central Bank of Northern Cyprus, no less than two thirds of exports from that area were to the United Kingdom and that no less than 60 per cent. of those exports were agricultural produce from a subsidiary of Polly Peck? Will the Minister make it clear to the administrators of Polly Peck that those so-called assets of Polly Peck in northern Cyprus belong not to Polly Peck, or to Asil Nadir but, legally, to displaced refugees, such as those from Morphou? Will the Minister at last do something to stop the illegal trade between northern Cyprus and this country?

Mr. Hamilton: It behoves all Members of the House, by virtue of the great latitude that parliamentary privilege gives them, not to abuse that privilege and hence prejudice the outcome of any current criminal proceedings. To prejudice those proceedings could result in a failure to convict the guilty.

Mr. Anthony Coombs: I appreciate what my hon. Friend has just said, but does he appreciate that many of the assets held by Polly Peck and regarded as its own were actually illegally acquired from Greek Cypriot owners as a result of the Turkish invasion in 1974? Is there not a very strong case, given the recent behaviour of the Turkish

Cypriot regime, for the British Government to toughen trade sanctions against the illegal regime in northern Cyprus, particularly on citrus fruits and tourism?

Mr. Hamilton: I think that we have strayed a little from the affairs of Polly Peck. I put my hand into the middle of a hornet's nest, which I had not anticipated. My only concern is to ensure that the administration of Polly Peck is conducted as quickly and efficiently as possible, so that creditors of the company are paid out and those who have committed offences are brought to justice as a consequence.

Mr. Robin Cook: Is the Minister aware that for the guilty to be convicted, they must first be charged? It is now two years since the administrator discovered seven separate donations to the Conservative party. Can the Minister tell us whether Companies House, the Department of Trade and Industry investigation unit or the Serious Fraud Office have investigated why none of those donations was disclosed in Polly Peck's accounts? If they have been investigated, can the Minister tell us why, in the two years, no charge has been brought for such an obvious breach of the Companies Act 1989?

Mr. Hamilton: I can easily explain that to the hon. Gentleman. Whether he will understand is another matter. As he is aware, criminal proceedings are currently outstanding against a number of the directors of Polly Peck. If Asil Nadir returns to this country, he will he subject to charges. As a consequence of being convicted of those charges, it would be possible for the court to disqualify him as a company director for a period of 15 years. As a bankrupt, he is currently disqualified as a company director. As a matter of course, my Department does not seek to impede the way in which the Serious Fraud Office carries out its investigations, because that might prejudice the outcome of proceedings. If we did as the hon. Gentleman suggested, we would prejudice the possibility of bringing Mr. Nadir to justice, because if we were to embark on disqualification proceedings against him at the same time as the Serious Fraud Office, he would inevitably apply to the court for a suspension of proceedings on grounds of prejudice. That could well delay the possibility of bringing the main action against him on which greater and more draconian penalties could be imposed.

Mr. John Marshall: Does my hon. Friend agree that it is most unfortunate that Mr. Nadir said that he would co-operate with the administrators of Polly Peck and then sought to frustrate them at every turn? Is not it equally unfortunate that he says at press conferences that he wants justice and then flees from it? Is not it high time that he came back to Britain and faced the music?

Mr. Hamilton: I entirely agree with my hon. Friend. Mr. Nadir should put up and shut up, and I commend that last piece of advice to the hon. Member for Livingston (Mr. Cook).

Coal Industry

Mr. Corbvn: To ask the President of Trade v, hat recent discussions he has held with British Coal on the future of the coal-mining industry.

Mr. Eggar: My right hon. Friend and I meet members of the board of the British Coal Corporation as necessary to discuss a range of issues.

Mr. Corbyn: Will the Minister confirm that, in those discussions, he has talked to British Coal about the principle of market testing the 12 pits? Does he agree that market testing is a cruel con and a deception because the Government have already ensured that there is not a market for that coal and that there is a rigged market against the coal industry? What they are trying to do, and have been trying to do since 1979, is punish miners by closing pits and destroying the coal-mining industry, when it could be a safe and secure source of energy for the next 300 years.

Mr. Eggar: The hon. Gentleman would not recognise a market if he fell over it. He simply does not understand that British Coal has to find customers for the coal that it is producing. Currently, about 45 million tonnes of coal is stockpiled, either with the generators or with British Coal. If British Coal is to get additional sales—it has told us that there are additional markets available for coal—it must be able to compete with other forms of electricity generation. Surely the hon. Gentleman recognises that.

Dame Elaine Kellett-Bowman: Will my hon. Friend remember in all the discussions with British Coal, that gas, nuclear and oil-producing communities are just as important as coal-mining communities? Will he accept that I am grateful for the robust comments that he made earlier, and may I ask him to obey the instruction on my badge, "Don't bash gas"?

Mr. Eggar: I always pay close attention to whatever my hon. Friend says.

Mr. O'Neill: The Minister said that the difficulty in selling coal to the generators is attributable in part to the summer weather and high levels of stocks. In order that the collieries can sell coal and benefit from the subsidies that

he is apparently still prepared to provide for some time, will he be prepared to extend the enhanced redundancy arrangements so that collieries are not closed prematurely before 31 December, when the agreement expires?

Mr. Eggar: Clearly, we extended—partly in response to points that the hon. Gentleman and his hon. Friends made the period up until 31 December. It is too early to say what the future for those terms will be, but we want to allow a proper opportunity for market testing to take place and we want the private sector as well as British Coal to be able to enter into serious discussions with generators. I recognise that we have to give that a reasonable amount of time.

Mr. Oppenheim: Bearing in mind that, for decades, British Coal was protected from low-cost imports, that, for decades, it was protected from competition from gas-fired generation and that for decades, the Government insisted that it should be given cosy, Government-inspired contracts with generators, if the market has been rigged, surely it has been rigged in favour of coal. Everyone is concerned about miners' jobs, but should not we remember that there are consumers as well as producers of coal and that if we further rig the market in favour of coal, we will lose jobs in other sectors of the economy that rely on cheap energy?

Mr. Eggar: My hon. Friend makes a very good point. The basic core contracts that have been agreed between British Coal and the generators contain a subsidy from British consumers directly to the British Coal Corporation of about £500 million for every year of the contract, making certain assumptions about world prices. In addition, since 1979, some £18 billion of taxpayers' money has gone into the British Coal Corporation on restructuring and other grants. It simply is a complete misrepresentation of the situation to pretend that the market has been rigged against coal. In fact, a considerable subsidy has been available to it for a number of years, both from the Government and the consumer.

London Specialty Review

Mr. David Blunkett: (by private notice): To ask the Secretary of State for Health to make a statement on the conclusion of the London specialty reviews.

The Secretary of State for Health (Mrs. Virginia Bottomley): In my statement to the House on 16 February, and in the accompanying document, "Making London Better", I set out the framework for improving the health service in London. The Government's key objectives are clear: to improve the quality of patient services and the health of Londoners, to improve, in particular, family doctor and other community health services and to preserve and enhance London's national and international reputation as a centre of excellence in treatment, teaching and research.
The independent reviews of specialist services were announced at that time in response to a recommendation in the Tomlinson report. They were set up to address a problem that is recognised throughout the health service by professionals, practitioners and beyond—the extensive duplication and fragmentation of specialist services across the capital. There is a wide consensus that accepts that not only is such duplication not cost-effective but that it can inhibit the full potential for excellence in patient care and in teaching and research.
The independent advice from the specialty reviews published today will be an important consideration as we take forward the long overdue changes that London's health service genuinely needs. I am grateful to the chairmen and their teams for their hard work.
Their advice, although important, is only one of many considerations. The process of change is one of evolution and direction, not of imposition. The specialty reviews are not a blueprint for the future. Proposals for improving services are already being developed locally by the institutions themselves, by health authorities and by others directly concerned. They have all shown an impressive degree of commitment to forming practical solutions to London's problems.
The Government believe that it is paramount that proposals are guided by the needs of patients. We shall take decisions on the basis of sensible plans that take the whole picture into account and that will lead to a better health service for London and for Londoners.
There are difficult decisions ahead. As I told the House before, no change is no option. I also recognise the need for acting as swiftly as we reasonably can, not least because uncertainty is in nobody's interest. We will concentrate on inner London, where the most serious problems exist.
The Government have shown their strong commitment to the NHS in London. Seventy eight major new capital developments will take place this year to improve family doctor and local health services. We will invest an extra £170 million in capital development over the next six years, building up primary care services where they are needed. We are targeting a further £10 million this year on reducing waiting times, improving on the one third fall in waits for hospital admissions of more than one year that has been achieved since March 1992.
I want London to have the best specialty centres in the world into the 21st century, alongside other first-class services. To achieve this will require effort, determination and change. The process is well under way. The will exists. The task now is to build on this commitment to build the modern health service that our capital city deserves and demands.

Mr. Blunkett: My thanks to you, Madam Speaker, for agreeing to this private notice question. I concur with the Secretary of State in thanking the members of the review groups.
Does she agree that it is not an academic exercise? It is about real patients and real centres of excellence, from training and research at Hammersmith to highly renowned, high productivity at Harefield. Having moved from Tomlinson and the London review to the four Thames regions and beyond, will she tell the House what needs assessment has been carried out to make a judgment against which we, as representatives of the public, can make our decisions?
Will she now acknowledge that Labour Members were right on 16 February to call her statement a "fudge" which misled her own Back Benchers to believe that not many hospitals were threatened and no hidden agenda existed?
How can anyone trust the Secretary of State to provide one extra penny when the Government's whole agenda is cut and closure, when the chairman of the London Implementation Group is suggesting in today's Evening Standard that existing funding promises have already been dropped, and when the Secretary of State talks about £170 million—I use her word—"extra" investment in primary and community care and it turns out to be money taken from other areas and not extra to the health service?
How can anyone have faith in the Secretary of State when she refuses to accept responsibility and fails to be accountable? This afternoon she said nothing at all about the specialty reviews. Is the market in charge, is the right hon. Lady in charge or, more likely, is nobody in charge of what is going on? What is the agenda? What is the timetable? How is consultation to be meaningful when one report conflicts and overlaps with another?
Will the Secretary of State now agree to establish a London regional health authority to do the job? Will she agree to pause, to think and to be open and honest with us all? Will she agree to start again?

Mrs. Bottomley: I am disappointed that the hon. Gentleman seems to take every opportunity to develop a great scare story about the proposals. The hon. Gentleman himself said that the status quo in London is no longer an option. I believe that to be the case. We have set out in "Making London Better" a sensible framework for making decisions, but they need the ownership of local districts, who are the purchasers and commissioners for health care.
We also need to broke a change with the research institutions and the universities because the treatment of patients needs to be considered, as well as research and education. They are certainly extremely complex matters.
The independent reviews play an important part in that decision making, but they are independent, they have declared their independence and will now want to be considered across the service.
The task is to achieve change. There are a great number of discussions under way across London. I commend the


way in which so many have already constructively participated in that. There are also substantial improvements such as the £200 million Chelsea and Westminster hospital that opened only the other day. We have the £11 million approval to go ahead at the Homerton and the improvements to the accident and emergency services at King's College hospital as well as the Royal London.
The hon. Gentleman is always doom laden. The only capital in which he is interested is political capital. We are interested in a health service for the future in London, and the necessary decisions will be made as fast as is reasonably possible.

Mrs. Marion Roe: Does my right hon. Friend agree that the most pressing need in London is for primary health care services to be built up from family doctors and others in the community? Does she also agree that it is very hard to justify such extensive duplication of specialist services when more resources need to be diverted to no less vital services at local level?

Mrs. Bottomley: My hon. Friend has identified the issue precisely. That is why, when we announced "Making London Better", we gave a clear commitment that progress would be made only as the primary care services were developed. That is the significance of the 78 capital schemes that are already under way to improve the family health and community services, and the further falls in waiting times.
The duplication and fragmentation of the specialty services will increasingly inhibit the ability of London and Londoners to benefit from the best of modern medical treatment and research. There are too many examples of smaller units duplicating the service provided by a neighbour, involving patients travelling between the services. The specialty reviews identify precisely how we can have those specialist services, but in such a way that they can compete not only nationally but internationally in the future.

Ms Liz Lynne: Has the Secretary of State any intention of maintaining national centres of excellence such as Harefield hospital? Does she agree that to break up specialist teams that have been highly successful would be an act of sheer folly? Will she allow us to see the full costings of the reviews, so that we can know the real reasons behind the proposed changes?

Mrs. Bottomley: The position is clear. Our proposals are about improving services and strengthening excellence. As the independent reviews made clear, the proposals were not costed; it is now for the London Implementation Group, along with the regions, to say what are achievable and realistic changes.
We shall start in the centre in introducing the changes, but I hope that the process will not take as long as it took St. George's hospital to move from Hyde park corner to Tooting. That took well over 20 years. I do not believe that staff in London's health service could sustain the uncertainty for as long as that.
All agree that change is needed; we want to make that change effectively and well.

Mr. Roger Sims: Is it really a proper use of what will always be limited resources to provide 14 centres for cardiac surgery and 13 for cancer treatment in

London? Does it not make sense to try to concentrate resources in a more limited number of areas, for the benefit of the patient?
Will my right hon. Friend confirm that the reviews are simply advice, and not firm proposals—which is how parts of the media have already interpreted them?

Mrs. Bottomley: My hon. Friend has got it exactly right. The reviews consist of independent advice. There is, however, widespread agreement that the size of London's specialist services inhibits their ability to achieve the excellence that many would wish to achieve. As I have said, there has been wide support for our introduction of what all will agree is complex and difficult change. The president of the Royal College of Physicians, for example, said that the proposals in the specialty reviews were "fair, reasonable and rational".

Mr. Peter Shore: Among the recommendations are proposals to close the Queen Elizabeth hospital for children—a 130-bed hospital—and to transfer its services to the Royal London hospital, which has capacity for only 50 beds. I do not know how that can improve the services available to sick children in north-east London.
At the same time, the closure of Bart's—particularly that of its accident and emergency department—will mean that more patients will attend the London accident and emergency department. As the right hon. Lady well knows, only four months ago the accident and emergency department of the Mile End hospital was closed. Can she at least guarantee that there will be proper consultation with all concerned before any decisions are made, and that no closure or transfer will take place until alternative and adequate facilities have been put in their place?

Mrs. Bottomley: I give the right hon. Gentleman an absolute assurance on both those points. The need for consultation before significant changes take place is clear, and we have made it our commitment time and again to introduce changes only on the basis of improvement in services. I ask him to look at some of the primary care developments taking place in his constituency, because there has been a substantial investment in underdeveloped GP services: 78 capital projects; hospital at home; and facilities for community nurses and general practitioners. As the right hon. Gentleman knows, I have some knowledge of his constituency and the underdevelopment of the family doctor services always created heavy pressure on some of the hospital services. These changes matter for London and Londoners.
On the two matters about which the right hon. Gentleman seeks assurance, the answer is yes.

Sir John Wheeler: Can my right hon. Friend confirm that distinguished medical people and others who constituted the review teams have advised that there is a real danger of specialist research services in London being overtaken by those elsewhere in the United Kingdom unless those services are concentrated on specific sites to enable their continuation?

Mrs. Bottomley: It is understandable that Members of Parliament will be concerned about their own hospital or institution when they think that change must be under way and I accept and recognise that. My right hon. Friend makes a very important point when he talks about the


opportunity of change, because there are real opportunities for strengthening specialist centres, research and teaching, and it is very difficult to find any member of the medical, the academic or the research community who will do anything other than warmly endorse the approach that we are taking.

Mrs. Audrey Wise: To what extent was there unanimity or disagreement within the review teams? Will the Secretary of State also tell us whether consultation will involve the people who live in the areas affected?

Mrs. Bottomley: I do not know whether there was disagreement among the review teams because they were independent. I met all the chairmen and they took to the task with great diligence. They are people of significant eminence and calibre within the health service. They spoke with a range of people on their teams to bring forward their recommendations for strengthening and improving the specialist services. Of course, before any significant changes take place in London, as elsewhere, those matters have to be the subject of public consultation. I repeat that changes will be made only on the basis of improving services for patients.

Mr. David Congdon: I recognise the need for change in London's health services, but will my right hon. Friend clarify how the process of change will be managed—especially the interaction between the proposals announced earlier in the year, following Tomlinson, and the specialty reviews announced today?

Mrs. Bottomley: The London Implementation Group will be working with the regions to take forward practical and sensible proposals. It will be informed by the independent reviews and also by the review of research in the special health authorities. It will then be its job, within available resources and on the basis of the improvements in primary care, to consider the needs of patients and above all to discuss realistic options for the future with the district health authorities—the people who commission health care for patients.
I repeat that no change is no option. Patients are already, being treated in their constituencies, closer to home. London hospitals have fixed overheads based on the past; we have to help them to build and reconfigure the health service for the future.

Ms Glenda Jackson: Will the Secretary of State explain the criteria exercised by the independent review bodies, which have recommended that the renal transplant unit at the Royal Free, where the first successful kidney transplant outside the United States of America was undertaken, must be moved to the Middlesex because of the lack of academic development on site but that a plastic and burns unit should be moved to the Royal Free although it claims that there must be professional links with UCH? There seems to be a grave discrepancy about what constitutes a specialty in this instance.

Mrs. Bottomley: It is not for me to justify every last element of the independent reviews; that is precisely the nature of the reviews. The Labour party believes that everything must be done. with a command and control approach. We wish to achieve the change. Our responsibility is to ensure that London has a health service

for Londoners and that research and education is consolidated and strengthened. The recommendations, as they affect the Royal Free, will no doubt be a subject for discussion with the region, with local hospitals and with the implementation group to ensure that all points are properly satisfied.

Mr. Michael Shersby: In view of the fact that Harefield hospital is situated not in central London but on the furthest extremity of the county of Middlesex, and in view of the fact that its world famous heart transplant unit is a national asset, can my right hon. Friend give me any assurance about its future?

Mrs. Bottomley: My hon. Friend would not want me to rule out change for ever and a day. No holder of my office would ever say that any particular hospital or institution will never be subject to change. This proposal has been made in the past. However, the most serious and intense problems are in central London where there is great competition and where fixed overheads are becoming ever more acute. I do not see any prospect of Harefield moving from its present site in the near future.

Mr. Brian Sedgemore: ': Will the Secretary of State confirm that a number of the specialty review teams have recommended that even in the instances where St. Bartholomew's has better clinical and research facilities they should, nevertheless, be transferred to the Royal London hospital rather than vice versa? Does not that make a mockery of the democratic process and consultations about a merger between St. Bartholomew's and the Royal London? Does she not recognise that it will end with herself, Sir Tim Chessells of the London Implementation Group and Admiral Staveley from the North East Thames regional health authority being dragged before the courts in a series of judicial reviews for improper and unlawful conduct?

Mrs. Bottomley: I somewhat resent the hon. Gentleman's comments. In all matters concerning the specialty reviews, I believe that we have acted with great reasonableness, and we established those reviews precisely so that we could have such questions answered. I urge the hon. Gentleman to consider. the remarks that I understand were made by members of the review teams at their press conference this morning where they made it clear that there had been no collusion between the different review groups and that they had in no way been subject to pressure from the centre in making the proposals that they thought were right to improve and strengthen specialty services.

Mr. Peter Bottomley: The original proposal was to spend more than £50 million moving the regional neurosciences unit from the Brook on Shooter's Hill to King's College and Maudsley.. There would be a general welcome if that proposal, which would clearly waste much of the capital in south-east London, were scotched. Will my right hon. Friend try to ensure that 'the Ministry of Defence can agree with the national health service that the Queen Elizabeth military hospital should be made available so that the local area and the commissioning agency can consider using the Queen Elizabeth military hospital as a substitute for the Brook and the Greenwich district hospital?

Mrs. Bottomley: My close Friend—[HON. MEMBERS: "And honourable?"]—and honourable Friend, indeed, most of the time—has raised a matter of great concern in his constituency. He makes a point that applies to all the specialty reviews: each is considering a particular specialty, but for each there is a local context. We have already discussed costing, but there is a broader context, too. My hon. Friend the Minister for Health is already having discussions with the Ministry of Defence on the future options for the Queen Elizabeth military hospital, to which my hon. Friend referred, and the role that it may play in the reviews.

Ms Kate Hoey: Will the Secretary of State confirm that no decision to close either St. Thomas's or Guy's hospital has been taken and that, in spite of some of the rumours that have been going round, the joint trust board is still considering the issue? Will she also confirm that if some of the specialty reviews went ahead there would be no possible way in which St. Thomas's or Guy's could close, because of the extra work that would be necessary at both those sites?

Mrs. Bottomley: I give the hon. Lady a clear assurance that no decision has been taken on that matter. As I understand it, the decisions on the site appraisal for Guy's and St. Thomas's will be influenced by the specialty reviews. However, it is important for all hon. Members to appreciate that the specialty reviews are not a map of how any of us believes that the services will be precisely distributed. The distribution will need to be affected by the site options, and by a realistic appraisal of the way forward. The warmest praise must be given to the staff at both the hospitals mentioned by the hon. Lady. They realise that in such a small area of London we cannot have King's, Guy's and St. Thomas's all competing with each other and all having a flourishing future. The reviews will be closely considered before final decisions are made.
The hon. Lady is concerned about her constituents, so I say to her that within Southwark, Lewisham and Lambeth no fewer than 112 proposals to improve the family doctor service are going ahead. As 90 per cent. of care takes place in the community, that is most important to her constituents.

Mr. Matthew Carrington: Will my right hon. Friend confirm that the Charing Cross hospital has been highly commended by the specialty reviews, especially for

its work with cancer, plastics and neurosciences? When reviewing the future of hospitals in west London, will she bear in mind that the Charing Cross is not only a superb hospital but that it is also by far the best located to serve the population of west London?

Mrs. Bottomley: Once again, my hon. Friend is a great advocate for the hospital that serves his constituents so well. As he says, the independent reviews have identified a number of areas in which it provides a high quality specialist service. That fact now has to be considered alongside viable long-term options, and my hon. Friend knows as well as anybody that, within range of his constituency, his constituents can go to the Hammersmith, the Chelsea and Westminster, the Marsden, the Royal, Brompton and also to St. Mary's or Queen Charlotte's, which are not so far away. The duplication of specialist centres in London is extremely costly and inhibits the ability to make the progress that we all want to see in London.

Mr. Simon Hughes: Given the undertaking that the Secretary of State gave to the right hon. Member for Bethnal Green and Stepney (Mr. Shore), and given that there is all the difference in the world between rationalisation and reduction, can the right hon. Lady 'say that no resident of London, worker in London or visitor to London will have any services that are currently available taken away as a result of the review process?

Mrs. Bottomley: I give the hon. Gentleman a clear assurance that the changes in London are about improving health and health care. He will know that in his area there has already been investment in King's accident and emergency department, and the £10 million development of the theatre blocks. The changes will be designed to ensure that there is further progress in reducing waiting times and in improving primary care—the 112 schemes in Lambeth, Southwark and Lewisham that I mentioned to the hon. Member for Vauxhall (Ms Hoey) are an example of that—as well as in strengthening the district general hospital services and in the proper development of the specialist services. The changes are about improvement.

Several hon. Members: rose—

Madam Speaker: Order. We shall move on. The subject will doubtless be with us time and time again.

European Council (Copenhagen)

4 pm

The Prime Minister (Mr. John Major): With permission, Madam Speaker. I will make a statement about the European Council Copehagen, which I attended with my right hon. Friend the Foreign Secretary.
The principal issue before the Council was how to promote economic growth throughout the Community. Although Britain is now emerging from recession, a number of European countries are still seeing their economies shrink—five are expected to be in recession during this year. Unemployment has grown throughout the Community and now totals 18 million—in most countries it is still rising, and in some it is rising quite sharply. Against that background, the President of the Commission presented options for economic revival in the medium term. That document has been placed in the Library of the House, together with the conclusions of the Council.
I largely agreed with the diagnosis set out by the President of the Commission, although not with all his proposed remedies. In the subsequent debate, I was encouraged by the wide recognition that the Community had to improve Europe's overall competitive position and to address the trend of rising unemployment throughout all of the past 20 years.
The Council agreed a number of practical measures to improve Europe's economic prospects. We stressed the importance of low inflation, specifically in order to improve cost competitiveness and achieve sustainable growth; we reaffirmed the priority given at the Edinburgh Council in December to growth and investment in our public expenditure programmes; we decided to expand the temporary lending facility of the European Investment Bank from 5 billion to 8 billion ecu, with a particular emphasis on helping small and medium-sized companies; we agreed that it was vital to reduce fiscal deficits—without that, much of Europe will not be in a position to reduce its interest rates.
The argument that the Community had to keep down costs in order to improve competitiveness and create new jobs was widely supported at the Council. It was felt that, unless that was achieved, we would find ourselves increasingly uncompetitive against, not only the Pacific countries, but also our primary competitors in the United States and Japan. It was also recognised that all Europe, without exception, had to face the problem of the rising costs of social provision, brought about by demographic and other changes.
The European Commission has been invited to present a White Paper on a medium-term strategy for growth, competitiveness and employment for discussion at the European Council in December. Member states will be submitting proposals for the White Paper. I believe that that will enable the Community to build on the European Council's new emphasis on competitiveness. Over the next six months, we shall press for reforms to increase flexibility in the labour markets and reduce unemployment. I hope that that will lead to a genuinely radical report at the December Council.
Following earlier Council discussions of subsidiarity, the European Commission has now produced a first list of items on which it has decided not to propose legislation. I will place that list in the Library. At the next Council, the

Commission will produce a further list, showing existing legislation that will be either repealed or amended. Subsidiarity was a controversial provision in the Maastricht treaty some time ago, but we now have strong support for our position from a number of member states. Subsidiarity is becoming a central element in the Community's decision making.
There was a substantial discussion of the Community's external policy. I would draw attention to only four specific items. First was the importance of urgent progress in the Uruguay round. I am in no doubt that a general agreement on tariffs and trade will benefit all Community members without exception, but there is a long way to go in a short time if a satisfactory agreement is to be reached during this calendar year.
Secondly, the Council was keen to see rapid progress in the enlargement negotiations with Austria, Finland, Norway and Sweden. We set 1 January 1995 as the target date for their entry—earlier than previously expected. Their membership, in my judgment, will strengthen the Community.
Thirdly, looking to the longer term, the Council agreed that the six associated countries of central and eastern Europe should be invited to join the Community in due course. It will, of course, take some time until they are ready. In the meantime, we will help them by increasing the Community's political links and by opening our markets more rapidly to their goods. A package to that effect was agreed.
Fourthly, the Council acknowledged the need to recognise Russia's international status, and agreed to my proposal to offer summits between the Community and Russia twice a year.
The deteriorating situation in Bosnia was discussed both by Foreign Ministers and by Heads of Government. Those discussions included the possibility of lifting the arms embargo. We agreed that the Community should encourage the efforts of Lord Owen and Mr. Stoltenberg to promote a fair and viable settlement. This view was widely shared, and is reflected in the Council's declaration on Bosnia-Herzegovina.
I argued that lifting the arms embargo would jeopardise the humanitarian operation and provoke a bloodier and perhaps wider war, with perilous consequences. We agreed after discussion that it was better to seek a peaceful settlement acceptable to all sides. But, as the Council made clear, this cannot be a solution dictated by the Serbs and Croats and at the expense of the Muslims.
The Council also agreed that the Community should support the efforts of the United Nations Secretary-General to secure additional troops and funds to implement the safe areas resolution. The United Kingdom is, of course, as the House is well aware, already making a full contribution.
This was a practical Council. It addressed directly the concerns of the peoples both east and west. It put in hand work on a new economic approach to make Europe more competitive and increase growth and employment. We will return to those matters at Brussels in December.

Mr. John Smith: I thank the right hon. Gentleman for his statement. I should like first of all to welcome some aspects of the Council's deliberations and conclusions.
On enlargement, it is gratifying that the Council agreed that the objective should be to have the accession of


Austria, Finland, Sweden and Norway agreed by 1 January 1995, arid that a positive approach has been taken to the associated countries of eastern and central Europe. I welcome also the positive statement on racism and xenophobia in Europe, which is timely and constructive. I hope that the Prime Minister will find it possible to do the same.
On the need for growth in the Community's economies and the vital importance of reducing unemployment, I welcome the increase in funds available to the European Investment Bank, which I hope will be of advantage to British enterprises. I also welcome the recognition in the communique that the recovery must be investment led.
However, there are some issues covered in the Council's discussions which must be a cause for concern to the House. The first of those concerns the grave and deteriorating situation in Bosnia-Herzegovina. It was important that the Council did not agree to the lifting of the arms embargo, which would have made a bad situation even worse. However, does not the Prime Minister recognise that such proposals gain currency because of the total failure to achieve the previously agreed policies in a number of crucial areas?
First, is it not the case that the designated safe areas are not in fact safe and that extra troops are required to make them more secure? The Secretary-General has asked for an extra commitment of 7,500 personnel. What is the United Kingdom Government's response to that request? Should not the Government follow the French example by agreeing to augment the British provision?
Secondly, is it not the case that the borders of Bosnia-Herzegovina have not been sealed? Why do the Government still rule out the use of limited air strikes to help achieve that objective?
Thirdly, is it not the case that sanctions are still wholly inadequately enforced'? Should not they now be extended to include Croatia in view of the recent deplorable activities of the Croats towards their Muslim neighbours?
Fourthly, is it. not obvious that there is a lack of any clear political objective since the Washington agreement effectively torpedoed the Vance-Owen plan? What is the point of making declarations about not accepting a territorial solution dictated by Serbs and Croats at the expense of the Muslims if they are not made effective?
On economic recovery, I note with interest that the United Kingdom Government are party to a communiqué which invites consultations to be encouraged among the social partners. Would it not be helpful if the Government accepted the need for such a dialogue here in the United Kingdom?
Do the Government not appreciate that the importance of public investment in the economic infrastructure arid in skills development, which the Council has recognised in its conclusions, is just as relevant to the United Kingdom economy? Is it riot the lack of such investment over the past 14 years which has caused Britain to be ranked 19 out of 22 in terms of economic strength by the World Economic Forum, below Spain, Portugal and Finland?
Surely the Government are not in a strong position to give advice or a lead to our partner nations when the same survey showed that, after 14 years of Conservative government, Britain was rated 21st out of 22 in the funding of research and development, and bottom—22nd out of 22—in industrial production.
Instead of seeking to turn the clock back by opposing social progress in Europe, should not the Government

have as their objective the creation of a high-productivity, high-skill and high-wage economy in Britain and in the Community, instead of seeking to compete on the basis of low costs and low skills, with all the adverse consequences that that would have for the people of this country?

The Prime Minister: The right hon. and learned Gentleman raises a number of points that I will deal with in turn. I am grateful for his welcome to the agreement on enlargement for the European Free Trade Association countries and our further approach to the eventual arrival in the Community of the central and east Europeans. That is the right way forward.
There was no dissent whatever on the racism and xenophobia proposals that were made and agreed in the conclusions of the Council. It is precisely for that reason that I did not mention them, but I welcome them; they were partly inspired by British initiatives, and I am delighted that they were generally agreed.
As for growth and the European Investment Bank the extra funds for the European Investment Bank are more modest than we ourselves would have accepted. We would have accepted a larger increase in the European Investment Bank funds, and that may yet come about when the matter is discussed in ECOFIN over the next few weeks.
On the subject of Bosnia, I am grateful for the right hon. and learned Gentleman's support for the position that we have taken on the arms embargo. I know that it is not shared universally in the United Kingdom, but I believe passionately that it is the right position for the United Kingdom Government to take at the moment.
As for safe areas, the Secretary-General has indeed called for an extra 7,500 troops, and I understand this afternoon that the French Government have agreed to send an extra 800 towards that particular contingent. I understand that some other European Governments—in some cases, perhaps, some who have no troops there—may also consider sending further troops. I do not immediately have that in mind, but we are sending 12 Jaguars to assist with other elements of operations in and around Bosnia, and they will depart very shortly.
On sanctions, their extension to Croatia may indeed be necessary. We do not judge it necessary at the moment, but it is certainly not something that I would wish to rule out. We may wish to go down that path.
As for the political objective, it is really the most straightforward of all political objectives. We want first and foremost to stop the fighting and stop the killing. That is why we have made such a substantial contribution to the humanitarian effort, and also the diplomatic effort, over recent months.
On the various points on economic recovery that the right hon. and learned Gentleman mentioned, despite his criticisms of the position in the United Kingdom, we are now clearly coming out of recession. Five of our European partners are now heading into recession. A number of our European partners now have unemployment on a very sharply rising trend, whereas ours is on a downward trend. In addition, we now have rising exports, in sharp contrast with a number of our European partners.
As for the low-wage, low-cost economy, I have to remind the right hon. and learned Gentleman of some underlying realities in terms of job creation and prosperity


right across Europe. It is to address those realities that we have raised the question of competitiveness and of social costs.
Taking the Community as a whole, labour costs in manufacturing—dear, I know, to the hearts of Opposition Members—rose by 4 per cent. a year throughout the 1980s. The increase in the United States was 1 per cent. a year, and in Japan there was no increase. That trend cannot continue unless we wish to see rising unemployment in this country.
Average labour costs were 20 per cent. higher in the Community than in the United States and Japan, and non-wage labour costs—predominantly social on-costswere almost twice as high on average in the Community as in the United States. That is not a coincidence, given the rising level of unemployment over the 20-year period.
I shall illustrate that point for the benefit of the right hon. and learned Gentleman. In Europe, growth achieves far fewer jobs than in the United States and elsewhere. I say that with no pleasure. However, in recent years, four times as many new jobs have been created in the United States as in Europe, from the same amount of economic growth. That suggests that dramatic changes are needed if we are to attack the problem of the 17 million people in Europe who are unemployed.
I understand the attraction of improving the terms and conditions of people in work. I should have thought that people would also be concerned with bringing back into work the 17 million people who are out of work. That is why we have raised the question of competitiveness and the need to look carefully at social costs.

Mr. David Howell: Is not the sheer common sense of my right hon. Friend's emphasis on competitiveness and minimising overheads—thus maximising the growth of private sector jobs—becoming more obvious as time goes by? Does he agree that those who took a different line at Copenhagen and urged that social overheads be increased were paving the way not only to fewer jobs in Europe but also to protection, which would in turn lead to still fewer jobs and still less prosperity in Europe?

The Prime Minister: I agree with my right hon. Friend, particularly about the dangers of going down the route that would lead ultimately to protection. That would be the only way in which an uncompetitive industry could be safeguarded within the EC.
There has been a sharp change in the attitudes of a number of our European partners to competitiveness and social costs—a change not just in their oratory but in what they are doing in their countries. For example, the German Government are proposing to cut the levels of unemployment and other benefits because they believe that to be necessary. In Holland, cuts are planned in social security benefits and child allowances. The Italian Government plan to raise pension ages and introduce new health service charges.
That is not because, ideologically, those countries wish to do that, but because they must recognise that there is a limited amount that can be afforded unless all our industry is to be priced out of business. We would then have unemployment on a scale that would be unimaginable.

[ Interruption.] At that point, the hon. Members who sit below the Gangway would blame the politicians who did not take action in time.

Mr. Paddy Ashdown: The Council's emphasis on unemployment was welcome. The Prime Minister may have found it odd. that the Council was dominated by the question of unemployment and of getting people back to work, whereas the Chancellor, in his Mansion house speech, could scarcely bring himself to utter the word "unemployment".
In my judgment, the Prime Minister is absolutely right to say that the challenge to Europe is how competitiveness can be maintained and improved while the social cohesion of our nations is maintained.
The Prime Minister talked about underlying reality. He should visit one of our most successful employers such as Toyota, where I was on Monday. The company will tell him of the underlying reality of maintaining competitiveness. It will tell him that that underlying reality lies in investing in the work force. It lies in investing in training. It lies in valuing one's work force and in providing them with the necessary social benefits. That is what Toyota believes will provide the high-value-added, high-investment, highly skilled work force that we need for the future. Does the Prime Minister realise that, by tracking a different course and cutting Britain out of that debate, he is doing our country, our workers and our economy considerable damage for the future?
I want to refer to Bosnia. The emphasis that the Council has at last placed on taking steps to protect the Muslims is very welcome, but if it is to will the ends, it must also will the means. Where will the troops come from? Is it not the case that the French have more troops in Bosnia than we have? If the French are prepared to reinforce, are we not prepared to make a contribution beyond that which we have already stated we will make? Does the Prime Minister realise that, if we are not prepared to say where the troops will come from, we shall yet again he condemning the European Community to make a statement that will not be put into practice?
Does the right hon. Gentleman realise that the present wretched situation in Bosnia was entirely inevitable from the very moment when we let the Serbs understand that they could carry out aggression and that we would not stop them? Has he any idea of the size and cost of the failure, not of the soldiers on the ground but of the politicians in Europe these last nine or 10 wretched months?

The Prime Minister: First, let me try to respond to the right hon. Gentleman's second point, on Bosnia. Right from the start, there were, in reality, only two ways of dealing with this whole wretched miserable war. [HON. MEMBERS: "For whom?"] For anyone. The first alternative was to put in literally hundreds of thousands of western troops. [ Interruption.] That is the view of every political or miltary leader who has been deeply involved in the matter. No one was prepared for that.
I wonder whether, if we had done that,' we would have had the right hon. Gentleman's support when the dead and injured troops came back here. The only other way to deal with the problem was the way that we have chosen, which is to deal with the humanitarian aspects and seek a negotiated settlement—painful and difficult though that may be. That is what we have sought to do.
The right hon. Gentleman is wrong to say that the French have more troops in Bosnia than we have. The French have more troops in Yugoslavia as a whole but Britain has more troops in Bosnia than any other nation at present.
The right hon. Gentleman asked where the 7,500 troops will come from. The commitment of troops arises from a United Nations resolution. It is not just the countries of the European Community that have committed themselves to contributing towards those troops: we have made a substantial contribution. Other European Community countries have indicated that they are considering doing the same.
Beyond the Community, others will also make a contribution. It does not help anyone for the right hon. Gentleman to assume that it is just the Community that must deal with this matter, when that is patently not the case.
On the right hon. Gentleman's earlier point about investment, it is not odd that we spent so long discussing these matters at the European Council. We had been pressing for a long time for a realistic and frank discussion in the Community of what really deals with growth. My right hon. and learned Friend the Chancellor has been stressing the need for flexibility and social changes for a long time; he was doing so long before he became Chancellor—sometimes, when he held other positions, to the frustration of others.
If the right hon. Gentleman wants to know about investment, he asked the wrong question of Toyota. He should have asked, "Why did you invest in this country?" The answer to that question lies in the supply side policies that the Government and their predecessors have followed since 1979.

Several hon. Members: rose—

Madam Speaker: Order. Before we proceed any further, I remind the House that I am now looking for single direct questions to the Prime Minister. I want brisk exchanges so that I can call as many hon. Members as possible.

Mr. John Biffen: I welcome the proposals for Community enlargement, and congratulate my right hon. Friend on his work to that end. But in the spirit of what is practical, which he said underlined the Copenhagen Council meeting, was consideration given to revising the timetable for economic and monetary union in the light of the current state of the European economies?

The Prime Minister: In the interests of observing your admonition, Madam Speaker, I am tempted simply to say "No", but my right hon. Friend's question deserves a more comprehensive answer. Revising the timetable was not considered but, of course, the convergence criteria that we agreed in Maastricht need to be met before there can be any progress. As I have told the House before—I am happy to reiterate it today—I do not think that there is a snowball in hell's chance of those criteria being met on the previous timetable.

Mr. Neil Kinnock: I say to the Prime Minister with regret that, coming from him, "flexibility" and "deregulation" in the labour market are euphemisms for lower wages, lower skills and greater insecurity. That is no way out of the difficulties that this country and other comparable countries face, because attempts by economies

such as ours to go down market in the world economy simply mean impoverishment and social fragmentation, as they have in many parts of the United States.
I share the right hon. Gentleman's enthusiasm for competitiveness. The road to that competitiveness, lower costs and wealth creation must lie in encouraging innovation, deepening and broadening skills, and achieving greater success in the modern world, not in a wage-cut world.

The Prime Minister: On the right hon. Gentleman's latter point about innovation and deepening and broadening skills, I stand full square with him. It is not least for that reason that we have greatly increased the number of our young people going into higher education—our target of one in three by the turn of the century is nearly met. The encouragement that we have given people to develop skills in polytechnics and elsewhere is well known to the right hon. Gentleman. On his earlier point about euphemism, I tell him that it is a euphemism for more jobs, more prosperity and more growth.

Sir Peter Hordern: Does my right hon. Friend believe that Mr. Delors and the European Commission have any idea of the risk to employment that is brought about by the working time directive and other such measures, and increasing competition from the far east and the United States? Does my right hon. Friend see a serious risk of protectionism and a lack of will to bring about a successful conclusion to the Uruguay round?

The Prime Minister: In my remarks to the European Council, I stressed again specifically the damage that we believe is done by the working time directive and a number of other directives that I particularly specified. There are differing views in the Community about that, but I think that the views that oppose ours are less strongly held today than they were a few months ago.
There is a danger that some nations in the European Community may have a tendency towards protectionism, rather than dealing with the underlying problem of making changes that will ensure that they are competitive around the world. That view is not shared across the Community.
A number of other states join us strongly in our belief that we need to deal with our costs—employment on-costs are perhaps predominant among them—to ensure that we are competitive. If we were to get in a position where protection led to a trade war among the United States, Japan and Europe, let no one be in any doubt whatever of the devastating effect that that would have throughout Europe, and the devastating impact that it would have on jobs in each and every country of the Community.

Mr. James Molyneaux: Is the Prime Minister aware of the widespread support for his determined efforts to instil some common sense into the deliberations of the Council, not least in the area of the irresponsible meddlings in Bosnia? In the past, it would seem that our European partners have tended to say "Go on" instead of "Come on" in terms of military commitment.

The Prime Minister: I am grateful to the right hon. Gentleman. Some of our European partners have, of course, made a substantial contribution. Others perhaps have tended to stand back a little more. I think that the


right hon. Gentleman puts it more crisply than I would have done, but I understand, as does everyone else, precisely what he meant and whom he means.

Mr. Bowen Wells: Will my right hon. Friend confirm that there was no discussion of the social charter at Copenhagen? Was there any recognition of the serious harm that it does to competitiveness throughout Europe?

The Prime Minister: There was certainly a recognition of the harm it does, because I referred to it in the remarks that I made. I am bound to say that there was less obvious enthusiasm for the social charter, and there was no indication from other member states that they were inclined to take a harshly critical view of us for not being part of it. Clearly, many of them still have their old oratory and their own ideas to cling to. But I have hopes that, as month succeeds month, reality will dawn ever more clearly across the Community.

Mr. Andrew Faulds: As for safeguarding the future of Bosnia, we have nothing but words, words and words. Does the Prime Minister realise that he should be ashamed of himself, as should his Foreign Secretary and the supposed leaders of the European Community, for his total spinelessness and pusillanimity? [ Laughter.] Stupid bastards! They are laughing about this.

Madam Speaker: Order. The hon. Gentleman had better calm down—as indeed Ministers on the Front Bench had better calm down.

The Prime Minister: In the interests of brevity and in view of your injunction a moment ago, Madam Speaker—no.

Mr. Alan Howarth: Does my right hon. Friend agree that there is a large constituency across Europe for the Conservative vision of an unbureaucratic, decentralised Community of member states joining together for sensible, practical and limited purposes, and that that has been increasingly reflected in the willingness of other member Governments to follow his lead in embracing both subsidiarity and enlargement?

The Prime Minister: My hon. Friend is right about the changing mood across the European Community. When there was clear year-on-year growth of 3·5 per cent. a year, many people were inclined to overlook some of the difficulties of central bureaucracy. Now that that 3·5 per cent. year-on-year growth has disappeared, public opinion is perhaps ahead of political opinion across Europe in being suspicious of moves towards centralisation. I regard that as an attractive change of opinion, because I believe that it will bring more realism among politicians of all shades across Europe about what can and should be attempted in any reasonable time scale.

Mr. Alfred Morris: What is the Prime Minister's assessment now of the prospects for success in the Uruguay round, and what discussions did he have with other Heads of Government in Copenhagen about the pace of progress, in particular with Mr. Mitterrand?

The Prime Minister: I have often said how important I believe the settlement of the Uruguay round is. I bitterly regret that we have not had a settlement for the past two years. For far too long, Heads of Government across the world have committed themselves to reaching a settlement of the Uruguay round by the end of that year. The end of that year has come and no settlement has come with it. I regret that very much. So I am concerned that we do not yet have an agreement.
There are clearly problems to he overcome. Some progress has been made. The progress made on the oilseeds agreement in the Community was definite progress. We may be able to form a clearer judgment after the G7 summit in Tokyo in a month or so.

Mr. Nicholas Winterton: Is my right hon. Friend aware, as I suspect he is, that Europe is becoming more and more uncompetitive with the rest of the world year by year, and that, in. addition, Europe is losing manufacturing capacity to the rest of the world? Is it right that, when we are beginning gradually to come out of recession and most of Europe is going into recession, we are not spending more time seeking business in north America, south America and the Pacific rim, where the real wealth of the world is currently being created?

The Prime Minister: I am certainly aware of the competitiveness points. I am keen to ensure that primarily Britain but also the whole of Europe seeks to become more competitive and goes to those markets to pick up the business that can best be undertaken in Britain or elsewhere in Europe. We must do that.
But that will not be achieved, as my hon. Friend said, unless we are competitive. That means that we must address seriously all the component costs that go into the cost of our goods. Predominant among those are labour and social costs. I know that that will be interpreted by Opposition Members in the way that they always interpret it—as recommending a sweatshop economy. That type of thinking about a sweatshop economy leads to 17 million people being unemployed across Europe. The people who genuinely care about creating jobs and employment are the people who will take action to make this country competitive, and they sit on these Benches.

Mr. Peter Shore: On the key question of unemployment and recession in the Community, is not the Council of Ministers' policy becoming almost completely schizophrenic? Is it not strange indeed that we should be urged to increase public expenditure, including public investment in infrastructure and other projects and that money should be put aside to subsidise interest rates up to a production of 3 per cent. when at the same time all member states are committed to economic and monetary union and are prisoners of the exchange rate mechanism that keeps European interest rates more than twice as high as the interest rates in Japan and the United States of America? That is not merely schizophrenic, but completely absurd.

The Prime Minister: The right hon. Gentleman is perhaps addressing his remarks to the wrong Head of Government. Within existing levels of public expenditure, we have sought to ensure the priority of capital investment as against revenue expenditure. That is what happened in


the public expenditure survey carried out last autumn, and certainly that will be a priority in our public expenditure this year.
The right hon. Gentleman touches on an intriguing point with the proposition that is to be discussed by ECOFIN to have subsidised interest rate lending by the European Investment Bank to small and medium-sized companies. He may be interested to know that a reason why that has gone to ECOFIN is that I flatly opposed it on the grounds of competition.

Sir Peter Tapsell: Did any Head of Government at Copenhagen make the point that it was somewhat futile to have a Community summit with unemployment at the head of the economic agenda when the terrible and still worsening unemployment position in the Community has been caused largely by the past, present and continuing high interest rate policies of the independent central bank of Germany?

The Prime Minister: No one entirely agreed with the point made by my hon. Friend. The clear indication in the summaries that we saw and discussed is that, although the recessionary impact of the past few years has accelerated the growth of unemployment across the Community, there has been an underlying growth in unemployment that has gone on through boom and slump during the past 20 years. There has been an inexorable rise during the past 20 years.
Apart from the impact of the recession over the past few years, it is the realisation of that underlying and inexorable rise over two decades that has finally prompted so many European Heads of Government to decide that they must address this problem seriously and urgently.

Mr. Dennis Skinner: When the Prime Minister talks about unemployment, is he aware that he is making a good case for getting out of the Common Market? When I saw the press conference during the past few days, for the life of me I did not realise that they were discussing some of the things that he has mentioned today. Every time, he was asked when he was going to sack his Minister of State, Northern Ireland Office. I will ask him that now: is the Prime Minister going to sack him or keep him?

The Prime Minister: The hon. Gentleman may be surprised to know that that was not discussed in Copenhagen.

Sir James Kilfedder: May I congratulate the Prime Minister on a successful summit, in which he played a positive and leading role? Can he say whether there was any discussion of federalism, as expected, or did the summit concentrate on the need to deal with competitiveness to get rid of high unemployment and inflation?

The Prime Minister: It may have been a subliminal theme, but it did not see the light of day too often. At the outset, I invited colleagues to throw away Euro-theology. Perhaps federalism comes under that heading.

Mr. Peter Mandelson: Does it not worry the Prime Minister that, as the public see splits over policy in Bosnia, inaction over unemployment and disagreement about some of the most fundamental social rights and standards in Europe, they will become increasingly disillusioned about Europe's ability to act together? Does not the right hon. Gentleman think that he has some

pesonal responsibility, above all, for ensuring that Europe's ability to work together is increased, rather than constantly frustrating and undermining it, as seems to be his approach to European affairs in general?

The Prime Minister: The hon. Gentleman's idea of how Europe should work together is that Britain should roll over and do what everybody else invariably wants. That is not the way I see European co-operation; it is not the way for any British Government to behave; and it is not what we are going to do.

Mr. Patrick Cormack: While disagreeing emphatically with what the hon. Member for Hartlepool (Mr. Mandelson) has just said, may I ask my right hon. Friend what steps the Community is now taking to inform the Serbs—those in Serbia and those in Bosnia—that safe havens in Bosnia will be made safe and that they will not be allowed to keep territory that was acquired brutally?

The Prime Minister: That, essentially, was the message of the communiqué that resulted from the summit. Today, the European Community's co-chairman, Lord Owen, will meet the partners—the Serbs, the Croats and the Muslim representatives—to discuss their ideas about the search for a settlement. I have no doubt that that point will be made again by Lord Owen, just as it is being made frequently by my right hon. Friend the Foreign Secretary and other European Foreign Ministers. My hon. Friend is right: this point needs to be emphasised continually. He has my promise that it will be emphasised.

Mr. Tam Dalyell: In Copenhagen, did anyone think to send to Mrs. Brundtland an indication that Norway would be more welcome if it were to change its policy on whaling?

The Prime Minister: I know the point that the hon. Gentleman has in mind. My right hon. Friend the present Secretary of State for the Environment has on a number of occasions made very plain the British Government's position on that matter; but it was not a subject for discussion at Copenhagen.

Mr. Tim Rathbone: Will my right hon. Friend remind the House of the fact—and re-emphasise it—that there seemed to be across-the-board agreement about the importance of low interest rates to the re-establishment of growth and the reduction of unemployment?

The Prime Minister: Yes, there certainly was some agreement about the attractiveness of that. However, perhaps just as important is the fact that there was agreement that the way to achieve the economic circumstances that would enable interest rates to come down is to reduce fiscal deficits right across the Community. We in this House are well aware of our own difficulty with the fiscal deficit. It is a difficulty faced by many other European countries. The need to reduce fiscal deficits throughout Europe in order to achieve low interest rates was well understood and clearly expressed.

Mrs. Margaret Ewing: While welcoming the accelerated time scale for enlargement of the Community, may I ask the Prime Minister what discussions took place about the implications of that extension for the various institutions of the Community? We have to deal with this matter in a practical manner, but we must also ensure that


there is democratic accountability to every citizen of the Community. Will the Prime Minister be more forthcoming about the time scale that is envisaged in the case of eastern and central European countries?

The Prime Minister: The hon. Lady has touched upon a very practical and important point. As part of the enlargement negotiations, some consideration will have to be given to institutional change. The voting weighting of the incoming countries is an obvious illustration. But really substantial institutional change is likely to be discussed at the next intergovernmental conference, which will follow the EFTA states' entry to the Community.

Mr. Raymond S. Robertson: Does my right hon. Friend agree that the best way to secure stability and democracy in eastern Europe would be to bring the countries there into full membership of the European Community and, in the meantime, to open up free trade with them?

The Prime Minister: My hon. Friend is quite right. I can say with absolute conviction that we have been the foremost proponents of ensuring that the central and eastern European countries are enabled to join the Community when they are ready and if they wish to join. Two or three years ago, it seemed a rather forlorn hope that the whole Community could be persuaded to agree to that policy; it has now not only agreed to the policy but set it out as a firm Community objective.

Mr. Bob Cryer: In the course of the discussion of the competitive position, did the Heads of Government consider the position of farmers and a cut in the common agricultural policy, which accounts for most of the £2·5 billion that this country pays each year? Do the Heads of Government ever sit back and consider the benefits that are supposed to flow from membership of the Common Market? Or would an unaccustomed silence fall if they were to try?

The Prime Minister: An unaccustomed lot of unemployment in the hon. Gentleman's constituency would follow if we were to fail to consider the benefits of joining the European Community. Sixty per cent. of our exports—this will apply to the hon. Gentleman's constituency, as well as to every other Member's—result from our trade relationship with the European Community.
If the hon. Gentleman thinks that his constituents will stay in work without jobs, he is living in cloud cuckoo land. On the question of agriculture, it may have escaped the hon. Gentleman's notice, as he lives in his own fantasy land, that this country led the way to securing an agreement on reform of the common agricultural policy.

Sir Teddy Taylor: Is it not a shame that no time was given to discussion of the crisis in agriculture? Despite these wonderful reforms, spending this year is breaking all records, as is the size of the cereal mountain. Does the Prime Minister agree that the best way of cutting costs and creating jobs would be to wind up this absurd policy, or to promote the idea that member states should be able to disengage from it, in the interests of farmers, consumers and jobs?

The Prime Minister: My hon. Friend is not right.

Sir Teddy Taylor: Want to bet?

The Prime Minister: I did not know that my hon. Friend was a natural better, but I may well be tempted to take him on. I do not think that he is right about this matter. The common agricultural policy has been discussed on many occasions. If it were to be discussed at every meeting of Heads of Government, it might be attractive to my hon. Friend to have Council meetings lasting three weeks, but it would not be attractive to me.

Ms Joyce Quin: Can the Prime Minister explain, why, in television interviews after the Council meetings, the Dutch Prime Minister and the French Foreign Minister both repudiated his views about European Community social legislation? Can he explain also why employment in the Netherlands has dropped sharply throughout the past four years even though that country has high levels of employment protection?

The Prime Minister: The hon. Lady is clearly unaware that the Netherlands is at present cutting social protection.

Mr. James Paice: Is not the best news for Britain the decision to bring enlargement forward to 1 January 1995? Will my right hon. Friend confirm that that would not have happened without the commitmen't at Maastricht; that, as a result, Britain will for the first time be one of a majority who are net contributors: and that, for the first time in Europe, those who pay the bills will be the voting majority?

The Prime Minister: I can confirm what my hon. Friend has said. There will be many advantages in a larger Community, including the EFTA states. It will certainly be a material advantage to have four more net contributors to the Community budget: that will add very dramatically to proper financial discipline when the Community makes decisions on spending.

Mr. Harry Cohen: How do lower wages, less social provision and greater unemployment, allegedly for the sake of competitiveness, differ from the policies that led to the great depressions of the 1920s and 1930s?

The Prime Minister: The hon. Gentleman would do well to go back and study the causes of the great depression. The policies that he advocates, with great sincerity and great regularity, are precisely those that would ensure that we had more unemployment. It would be worse and longer—in fact, for ever.

Mr. Ian Taylor: The Prime Minister showed at Copenhagen that, when we argue positively about a wide range of European issues, we have nothing to fear about the Community or its Councils. Will my right hon. Friend continue in that positive vein by stressing that economic convergence may take longer than expected, but that it is still in this country's interests that it should occur, and that the same thing applies to fiscal balances? In those circumstances, will he come forward, before the next summit, with positive ideas about how the European Monetary Institute might conduct its, affairs from 1 January, and perhaps revive the idea of the hard ecu?

The Prime Minister: My hon. Friend is entirely right about the importance of economic convergence and the specific fiscal and other criteria that we set out in the Maastricht treaty. Quite apart from the part they play in the move to economic convergence across Europe, those


criteria are right on their own merits for control of the economy in each and every European country. All the countries will consider how the EMI will work.

Mr. Tony Banks: Did any discussion take place in Copenhagen about the nightmare scenario involving the thousands of obsolete and leaking nuclear weapons held in the old Soviet Union? Has the Prime Minister any firm proposals to assist the various states of that former country to decommission and get rid of those terrible weapons?

The Prime Minister: Yes, that issue has been discussed in the past, and it was discussed again in Copenhagen. We are helping the Russians and other eastern European countries, bilaterally and as part of the Community, to deal with that problem. It is my intention and that of the other European Heads of Government to raise that matter yet again at the G7 summit in Tokyo. We require the assistance of the United States and Japan in particular if we are to make a comprehensive attempt to tackle the problem.
There is no doubt that any repeat of the accident at Chernobyl would have devastating consequences across a wide part of Europe. It is therefore very much in our interests to take this matter seriously now, and to seek to do something about it.

Mr. Roy Thomason: Has my right hon. Friend seen the article published in yesterday's edition of the Financial Times which said that Mr. Delors is now having to temper his ambitions as power is moving from Brussels to the member states within the Community? Does my right hon. Friend believe that the Copenhagen summit was a further step in that welcome direction?

The Prime Minister: I think that we see in many parts of the Community a more philosophical approach than was once the case.

Mr. William Cash: Given that my right hon. Friend has conceded that the convergence conditions under the Maastricht treaty are unworkable and are likely to lead to higher unemployment, would he care to explain how, in the movement towards 1996, we could get the unanimity required to unravel that treaty? How will that be achieved when about six of the member states have a vested interest in the subsidies they get, and are likely to continue to ensure that that treaty stays in force?

The Prime Minister: No, no: my hon. Friend has, uncharacteristically, misunderstood the point. It is not my view that convergence is unworkable. I think that it is necessary and desirable, quite apart from being part of the move towards economic and monetary union. What I believe to be unrealistic is the belief that convergence will be reached across the Community according to the timetable set out in the Maastricht treaty.
I thought that that was unlikely when we were asked to sign up to that treaty, which is one reason why we did not do so. Since then, however, the change in economic circumstances throughout the Community has made it

even less likely that that convergence will be achieved. It is desirable in its own right, but, in my judgment, it is now unrealistic to expect it by 1996 or anything like that date.

Mr. Anthony Coombs: Is my right hon. Friend aware that, although Britain currently attracts more than one third of foreign investment into the Community, the chairman of Daimler-Benz recently said that, due to unrealistic social and environmental costs, he would never build another car factory in his home country? Is that not a demonstration of how right the Prime Minister has been to emphasise the huge improvements and advantages that the British car industry now enjoys over that of Germany? Our car costs are 60 per cent. lower than those of Germany; that is one reason why Rover is currently outselling Mercedes-Benz in Europe.

The Prime Minister: My hon. Friend is right. I am happy to quote, approvingly, the President of the Commission, who referred to this country as a "haven for foreign investment".

Mr. Iain Duncan Smith: Does my right hon. Friend accept that one of the main reasons why the terrible war in the old Yugoslavia has erupted as it has was Germany's rush to recognise Bosnia and Croatia, against our better judgment? Many hon. Members are concerned that, in Copenhagen, the Germans once again attempted to drive us into a position that is wholly untenable. Does my right hon. Friend accept that we would not think of deploying further troops without a full debate in the House?

The Prime Minister: As I said earlier in response to a question from an Opposition Member, I do not envisage that any further British troops will be sent to Bosnia in the near future.
On the substantive point in my hon. Friend's question, the biggest single element behind what has happened in Bosnia is the collapse of the Soviet Union and of the discipline that that exerted over ancient hatreds in the old Yugoslavia. Once that discipline had disappeared, those ancient hatreds reappeared, and we began to see their consequences when the fighting occurred. There were subsidiary elements, but that collapse was by far the greatest.

Mr. David Shaw: Can my right hon. Friend recall the amount of job creation from small businesses from 1983 to 1987? Did he explain to his European colleagues how we achieved that? Can he confirm that the policy in Europe on small businesses and deregulation will be improved in the future?

The Prime Minister: I can tell my hon. Friend that we argued strongly for a policy that would lead to job creation across Europe. We will contribute to the White Paper which is now being produced and which will be discussed at the Brussels summit. I have no doubt that the contributions to it will be many and varied. We will certainly set out a series of supply side considerations of the sort to which my hon. Friend referred.

Points of Order

Mr. Phillip Oppenheim: On a point of order, Madam Speaker. Yesterday, during the debate on party funding, the hon. Member for Hammersmith (Mr. Soley) quoted from a letter alleging links between the President of the Board of Trade and an alleged fund-raising operation involving the Saudi Arabian Government. The author of that letter was not identified, and no substantiated evidence was produced to show that anything in that letter was true. The letter was quoted after the Saudi Arabian ambassador had specifically denied the allegations that appeared in The Guardian, and after the chairman of the Conservative party had also denied them.
I warned the hon. Member for Hammersmith that I intended to raise this matter with you, Madam Speaker. Although it is understandable that he should wish to divert attention from the appalling performance of the Opposition spokesman, was he not stooping low by raising an unsubstantiated allegation, and doing so when the President of the Board of Trade was patently not in a position to deny it?

Madam Speaker: Whatever happened yesterday or on previous days is a matter for the occupant of the Chair at that time. The incidents raised by the hon. Gentleman are not points of order. Points of order are not a court of appeal on what happened previously. If hon. Members believe that points of order should be raised, they should be raised at the time and dealt with. This is not a court of appeal at which we look back on something that took place previously.

Mr. Andrew Faulds: On a point of order, Madam Speaker. I should like to apologise to you and to the House for my temporary lapse a few moments ago, but it is aggravating to witness hilarity when one is discussing the sufferings in Bosnia.

Madam Speaker: Sometimes I have to exercise judicial deafness.

BILL PRESENTED

CIVIL RIGHTS (DISABLED PERSONS) (SCOTLAND)

Mr. Gordon McMaster, supported by Mr. Alfred Morris, Mr. Tom Clarke, Sir David Steel, Mrs. Margaret Ewing, Mr. Bill Walker, Mrs. Irene Adams, Mrs. Maria Fyfe, Mr Jimmy Wray, Mr. Jimmy Dunnachie, Mr. Archy Kirkwood and Mr. Adam Ingram, presented a Bill to prohibit, in Scotland, discrimination against disabled persons on the ground of their disability; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 2 July 1993, and to be printed. [Bill 213.]

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101( 3) (Standing Committees on Statutory Instruments, &c.).

PARALYTIC SHELLFISH POISONING

That the Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) (No. 6) Order 1993 (S.1., No. 1523) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Kirkhope.]

Question agreed to.

Young Offenders (Detention)

Lady Olga Maitland: I beg to move,
That leave be. given to bring in a Bill to permit the detention in secure units of young offenders below the age of 14 years; and for connected purposes.
The Bill would give juvenile magistrates the power to commit persistent young offenders below the age of 14 direct to a secure unit, without having to refer that decision back to social services.
The Bill is needed urgently. All too often, local authorities thwart public opinion and the police by refusing to take advantage of the law, whereby only they can apply to have young thugs sent to a secure unit, either while on remand or for sentence. Those local authorities, with their soft liberal attitude, prefer to send the offender back into the community; where, within hours, he reoffends. There is nothing that the law can do to stop them, but society has had enough. It is time to act against persistent offenders who do not respond to normal cautions. Juvenile crime today has reached spine-chilling levels. The crimes are nastier and on a greater scale than ever before, It is a nationwide crisis.
The Association of Chief Police Officers and the Police Superintendents Association of England and Wales estimate that the true rate of juvenile crime has leapt by 54 per cent. in the last decade. Not a week goes by without a report of grotesque misbehaviour by a young teenager, who then gets away with it.
Those thugs, who are aged between 10 and 14, must be kept off the streets. Magistrates are in despair over having to hand the offenders back to the social services; legally they cannot do otherwise. It is no use the Government planning more secure units or secure training establishments if it is not possible to send young offenders to them. My Bill seeks to redress that.
The inability to put a persistent offender into secure accommodation was highlighted in November by the tragedy in Stockton, when a stolen car, occupied by a number of runaways from children homes, collided with another car, killing one woman and injuring three others. The driver was typical of. the hard core of persistent offenders for whom magistrates were completely unable to insist on the provision of secure accommodation. Had that offender been put into a secure unit at the time, that woman would not have died.
My constituency of quiet, leafy and prosperous Sutton is not an area where one would expect to find a hard core of tough, young criminals. However, we have a gang of a dozen youngsters, who, with another dozen acolytes, have run up scores of offences of burglary—of both shops and residential premises—drug dealing, stealing cars, joyriding, ram-raiding and so on. The gang are all aged 14 or under. As they operate in pleasant suburbia, they are more money-oriented than their violent brothers in the inner cities, and can earn up to £2,000 a night with the help of adult Fagins.
Money and robbery becomes a drug to them. One young thug admitted to being addicted to stealing. The boys are arrogant and defiant, and know that they are above the law. They are skilled, fast and sophisticated in their work, and the scale of their crimes is disproportionate to their numbers.
The group to which I have referred call themselves the Sutton burglary posse. They are so confident that they stole a printing press and ran off calling cards, which they leave at the addresses that they rob. The cards say: "Sutton Burglary Posse was here—phone 999." In 18 months, those youngsters, all aged between 12 and 14, have stolen £1·5 million-worth of goods and caused hundreds of thousands of pounds worth of damage to property, for which long-suffering retailers and householders have to bear the entire cost in increased insurance premiums and repairs.
The Sutton burglary posse even has the nerve to telephone rakish minicabs, which, for a percentage of the profits, will collect the youngsters and their loot and cart them off home. If caught, the boys stand hands in pockets, boasting of their successes and telling the police. "There is nothing you can do to me." At present, they are right.
Moreover, they know their rights—telephoning solicitors before their parents, or, in other cases, calling social services in the middle of the night to get them out of the police cells. Once free, they escape back into crime.
They have no fear of the consequences, for there will be none. Instead, they laugh when arrested and joke with friends when they appear in court. When released, having been given yet another supervision order to cover perhaps scores of charges, they celebrate in an almost carnival atmosphere.
One ringleader in Sutton has been arrested more than 40 times, with 200 charges against him. He has admitted twice as many offences. On one occasion, he appeared in court to face 21 charges ranging from actual bodily harm to burglary, receiving, stealing cars, carrying an offensive weapon and so on. All that the frustrated magistrates could give him, accepting that social workers would not put him into a secure unit, was a one-year supervision order. Afterwards, he was congratulated by fellow posse members and his social worker on getting off so lightly.
His mother was furious. She had pleaded, "Lock him up for his own good." Not surprisingly, the local newspaper, the Sutton and Cheam Herald, ran the headline,
Posse boy walks free—age saves chronic burglar from harsher sentence.
Since then, he has committed another six offences. So much for socia) services' claim that he is a reformed lad. His solicitor pleaded for him by saying:
He has not offended for three weeks now.
His friends are no different. One has been arrested 31 times, with scores of charges. Do not be taken in by his small size and completely angelic looks. He can barely reach a car's pedals, but he has no compunction about stealing high-performance cars and purposely baiting the police into a car chase.
Another one was barely 13 when he was first arrested. Today, aged 14, among his many offences is a charge of blinding another boy with a pen. He carries a double-edged Stanley knife, which I am told is now highly fashionable among his group. It is good for heavy scarring.
Another boy, by his 15th birthday, had been arrested 60 times, and on each occasion only conditional discharges and supervision orders could be passed. There was

absolutely nothing that the magistrates could do, and the local authority was not prepared to apply to commit him to a secure unit. Now he is at last in Feltham, but the damage to society has already been done.
There are such posses all over the country. Many are nastier, with hideous reports of bloody violence. Police are angered, and society is furious at the contemptuous way in which they swagger back to the streets.
We would not be facing such a serious crisis if social workers and their political masters were more responsive to society's needs. The fact is that they are ideologically against putting a persistent offender into secure accommodation. Their argument is that such units are universities for crime and that, in any case, it is cruel. These juveniles are already in highly select schools of crime by virtue of the company that they keep.
What seems to be forgotten by social workers is that society pays an intolerable price for these crimes that far outweighs the cost of re-educating juveniles. I have visited three such units—Orchard Lodge at Crystal Palace, Glen House near Southampton, and Middlesex Lodge at Hillingdon. They are small, with a high ratio of adults to youngsters; the maximum number that a unit takes is eight.
Their purpose is as much re-education as removing them from society. They teach youngsters how to lead structured, normal lives, and give regular schooling with plenty of one-to-one teaching. Years of truanting have left such youngsters largely illiterate. Evidence shows that, by keeping a young person for several months, or ideally for a year, much good work can be achieved.
The decision about whether social services should refer a child to a secure unit is a geographical lottery. Sutton local authority is resistant, but Newcastle upon Tyne made more than 160 referrals in 1986, whereas in nearby Gateshead, only one child was locked up for similar behaviour. In Sunderland, crime was halved when an 11-year-old who had committed more than 200 offences was put in a secure unit. Research in Northumbria has shown that one in three juveniles reoffend while on bail.
Time is against us. It is quite unacceptable for youngsters to continue to punish the community. Magistrates must have the power to send them to' secure units. The Bill will redress the balance.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order.

Question put and agreed to.

Bill ordered to be brought in by Lady Olga Maitland, Sir John Wheeler, Sir David Mitchell, Mr. John Gorst, Mr. Nigel Forman, Mr. Michael Shersby, Mr. Patrick Cormack, Mr. Michael Stephen, Mr. David Lidington, Mrs. Cheryl Gillan, Dr. Robert Spink and Mr. Geoffrey Clifton-Brown.

YOUNG OFFENDERS (DETENTION)

Lady Olga Maitland accordingly presented a Bill to permit the detention in secure units of young offenders below the age of 14 years; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 2 July, and to be printed. [Bill 214.]

Orders of the Day — Agriculture Bill [Lords]

As amended (in the Standing Committee), considered.

Ordered.

That the Agriculture Bill [ Lords], as amended, be considered in the following order, namely, new Clauses relating to Part I, amendments relating to Clauses 1 to 3, Schedule 1, Clauses 4 to 11, Schedule 2, Clauses 12 to 22, new Clauses relating to Part II, amendments relating to Clauses 23 to 26, Schedule 3, Clauses 27 to 33, Schedule 4, Clauses 34 to 45, new Clauses relating to Part III, amendments relating to Clauses 46 to 49, remaining new Clauses, amendments relating to Clauses 50 to 57, new Schedules, amendments relating to Clause 58, Schedule 5, Clause 59.—[ Mrs. Gillian Shephard.]

New clause 18

PUBLICITY FOR DETERMINATIONS (No. 2)

'.-( 1) As soon as reasonably practicable after granting an application under section 2 or 5 above, the authority granting the application shall make public in such manner as it thinks fit—
(a) the fact that it has granted the application, and
(b) the principles of the approved scheme or, as the case may be, of the approved variation.

(2) As soon as reasonably practicable after deciding under section 6 above to withdraw an approved scheme's approval, the authority making the decision shall make its decision public in such manner as it thinks fit.'.—[ Mr. Jack.]

Brought up, and read the first time.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Michael Jack): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): With this, it will be convenient to discuss also Government new clause 17—Publicity for determinations (No. 1).

Mr. Jack: With your indulgence, Mr. Deputy Speaker, I shall make a short statement for the clarity of the House. I wish to inform the House that my wife and I held between us some 4,000 shares in Northern Foods plc which were acquired as a result of the company I worked for before coming into Parliament being taken over by Northern Foods. I say this as a matter of courtesy to the House.
I turn now to new clause 18 with which there are clearly parallel measures in clause 17. The Bill would require a milk marketing board to bring the principles of its reorganisation scheme to the attention of registered producers. Ministers would have to consult representatives of producers, processors, retailers and consumers of milk.
The principles of the scheme will be in the public domain. Under the provisions of clause 4, the reorganisation scheme may be modified between submission and approval if Ministers cannot approve the scheme in its original form. A scheme as approved may therefore be different from that originally submitted for approval.
If Ministers decide to approve a scheme, it is important that those affected by it should know what has been approved. The new clause would require Ministers to make public the principles of an approved scheme. The same format would apply to any proposed changes to the

potato marketing board. The new clause would also require Ministers to publicise any approved variations to the scheme. That is in the spirit of ensuring that all those who need to know what is going on can find out the facts.

Dr. Gavin Strang: I preface my remarks by congratulating the Minister on his appointment. I hope that he finds his term of office rewarding and worth while.
The new clause is better than nothing. It focuses attention on one of the Bill's great weaknesses. We have received considerable support from industry, and certainly from the Dairy Trade Federation which agrees that it is wrong that the new scheme is not subject to parliamentary approval.
The Bill should have provided for the approved reorganisation scheme setting up the successor body and associated matters to come before both Houses of Parliament for approval. There is no question but that we are talking of something of tremendous importance to the agriculture industry, food industry and consumers in Britain.
My second point focuses on what we consider to be the other flaw in the legislation. The new clause makes it clear that the applicants will be the boards. It refers to "after granting an'application", but an application may be made only by the England and Wales milk marketing board, the Northern Ireland milk marketing board or the Scottish milk marketing board. That substantially predetermines the outcome of the revised arrangements.
If the only scheme that can be approved is one that is submitted by a board, the boards will put forward single co-operative arrangements or something along those lines. The new clause rules out completely the option of integrated regional milk co-operators which certainly should have been given careful attention. That option would have provided for a number of integrated co-operatives owned by the producers covering England and Wales.
The requirement that the only scheme that can be approved is one submitted by the board pre-empts us. We will have a huge, voluntary single co-operative, probably dominating the marketplace. We are grateful, to the Minister for his clarification of the new clause. Of course it is desirable that such matters should be brought to the attention of the public. We simply regret that the revised schemes are not subject to parliamentary approval.

Mr. Jack: I understand the points that the hon. Gentleman makes and I thank him for his most courteous and kind words of welcome to the Dispatch Box. However, there was uniformity of agreement in Standing Committee that everyone wanted these matters to be dealt with as quickly as possible. I am sure that the hon. Gentleman will understand that the additional process that he suggested would slow up the measure.
The hon. Gentleman's remarks were very much addressed to the successor to the milk marketing board, but that will not be the only thing on offer. As we already know, other interested parties are proposing their own schemes which involve the taking of milk for the purposes of manufacture or liquid milk delivery. Those in the dairy industry will have to consider a multiplicity of alternatives.
In Standing Committee, on Second Reading and now, Ministers who will have to make the decision on what is an appropriate scheme, as detailed in clause 3, will obviously


take into account the concerns put to them in the House, but bearing in mind the large number of people who will look carefully at the successor schemes and the points that they put forward. There will be a widespread public debate as people consult and discuss the issue and I can assure the hon. Gentleman that the principal details will be laid in the Library of the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 13

FUNCTIONS UNDER SECTION 19 OF THE AGRICULTURAL MARKETING ACT 1958

'. The functions of a committee appointed under section 19 of the Agricultural Marketing Act 1958 (consumers' committees and committees of investigation) shall not include the consideration of anything done by a milk marketing board—
(a) by way of preparing for the enactment of this Part of this Act, or
(b) in connection with an application under this Part of this Act or the carrying out of an approved scheme.'.—[ Mr. Jack.]

Brought up, and read the First time.

Mr. Jack: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: Wit h this it will be convenient also to discuss Government new clause 14—Functions under section 19 of the Agricultural Marketing Act 1958.

Mr. Jack: In taking these two clauses together, it is important to stress that the establishment of committees of investigation and consumer committees is provided for by the Agriculture Marketing Act 1958.
The committees' purpose is to consider complaints about the operation of the milk marketing scheme and the parallel operation for potatoes and to monitor their effect on consumers respectively. The approval and monitoring of the implementation of the reorganisation schemes are dealt with not by that mechanism but by the Agriculture Bill and, as the Bill says, are matters specifically for Ministers. It is unnecessary for the committees to oversee reorganisation.
The new clause makes it clear that the committees have no particular or specific role in boards' activities relating to schemes of reorganisation before or after enactment.

Mr. D. N. Campbell-Savours: I welcome the Minister to the Dispatch Box and look forward to sparring with him many times in the future.
As the Minister will know, I agreed with the former Minister of State that I would not speak about the new clause on Report, as he had agreed.to withdraw it to allow consultation to take place outside the House. The Minister may also know that his hon. Friend has subsequently released me from that commitment.
Some concern is being expressed about the new clause. It appears to preclude the right of a consumer organisation outside the Government, the House and the milk marketing boards to complain about the operation of the scheme during the transitional period preceding vesting day when that transition might be considered to be the cause of any difficulties caused to milk consumers by the scheme. In effect, the transition could be used as an excuse for failure to report to Ministers and to put that report in

writing. Moreover, by removing the power of the committee of investigation to investigate any act or admission by the board through the use of the same "transition" arguments—or excuses—the new clause may well prevent a perfectly legitimate investigation from taking place.
Ministers may have had in mind the possibility of prolonged and delayed investigation when the new clause was tabled, but it does not necessarily follow that an investigation will be prolonged or delayed. At a time when the milk marketing board is in turmoil—it is going through a period of great uncertainty—the new clause may well act against the public interest. Indeed, precisely that has happened on more than one occasion in recent months.
We believe that the powers in the Agricultural Marketing Act 1958 should be retained, in the widest possible sense—if only for brief investigations—and that other powers that might be available to Milk Marque or to consumer organisations are insufficient.

Mr. Jack: I thank the hon. Member for Workington (Mr. Campbell-Savours) for his words of welcome. I have listened carefully to what he has said.
At times of change, there is a danger that people will use certain language to try to create a crisis where none exists. The hon. Gentleman said that the board was in a state of turmoil; my early observation suggests that it is working extremely hard to establish its future, while continuing to serve both consumers and providers of milk. Certainly, no flood of letters has arrived on my desk suggesting that it is in turmoil or that it is paying insufficient attention to detail.
The purpose of the committees, under the 1958 Act, is to consider complaints about the operation of the milk marketing scheme and to monitor its effect on consumers. By "complaints", I mean specific complaints about the day-to-day operation of the board. The committees are intended to examine the details of complaints; they were never designed to examine matters of policy. That is what the elected members of the board are there to do. They are the farmer representatives: they sit on the board to consider the complaints and concerns of the industry. It is important not to confuse the two sets of activities.
The committees were not established to judge what might be the nature of a successor organisation. The Bill sets out clearly the terms on which that job would be done. The hon. Member for Workington put his points precisely. Let me say to him with equal precision that this is not the committees' task, that I do not think that the board is in a state of turmoil and that the terms on which the interests of consumers, producers and others will be taken into account are clearly defined in clause 3.

Question put and agreed to.

Claused read a Second time, and added to the Bill.

New clause 1

MARKET DISTORTIONS ARISING OUT OF REORGANISATION

'.—(1) Where it appears to Ministers that distortions have arisen in the supply and marketing of milk, Ministers may by regulation introduce measures to assist in the orderly supply and marketing of such product.

(2) Measures may only be introduced under subsection ( 1) above where Ministers are satisfied that there has been an abuse of dominant market position arising out of—


(a) favourable treatment as to price and supply of milk to customers with whom a qualifying successor body is connected by reason of equity; or
(b) favourable treatment as to price and supply of milk to customers with whom a qualifying successor body is connected by reason of equity held by producers where such producers hold a majority share of the issued capital.

(3) Where Ministers are satisfied that such an abuse of dominant market position exists, they may specify a course of action to be taken by the qualifying successor body.'.—[Dr. Strung.]

Brought up, and read the First time.

Dr. Strang: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient also to discuss the following: new clause 7—Future regulation (No. 1)—

.—(1) In the case of a scheme of re-organisation submitted by the Milk Marketing Board of England and Wales the approval of the appropriate authority shall be deemed withdrawn if by vesting day any successor body to the said board has failed to appoint to its Board of Directors or equivalent a nominee of the appropriate authority for a period of three years from vesting day.

(2) It shall be the duty of such nominee to report quarterly to the appropriate authority on all matters relating to the purchase and sale of milk by the successor body including matters which in the opinion of the nominee could affect competition in the marketing of milk in England and Wales.

(3) Each report of the nominee shall be issued by the appropriate authority to such persons as in its opinion are representative of the interests of producers of milk and processors of milk within 14 days of its receipt.

(4) For the purpose of this section reference to a "successor body" shall mean any body proposed by a board in a scheme of re-organisation to be engaged in milk trading and in respect of which a statement of the nature required by section (2) (c) has been submitted.'.

New clause 8—Future regulation (No. 2)—

.—(1) In the case of a scheme of re-organisation submitted by the Milk Marketing Board of England and Wales it shall be a requirement of any approval of such a scheme that on vesting day or, if the target figure specified in subsection (2) below is attained before that date then on the day it is attained, the appropriate authority shall be advised by any successor body to the said board of the names of the producers contracting to supply milk to it and by the said board of the volume of milk which those producers had sold to it in the year 1st April 1992 to 31st March 1993 ("the period") and the total volume of milk sold to it during the period.

(2) Where the milk sold to the said board during the period by the producers contracting to supply a successor body represents 50 per cent. or more of the total volume of milk sold to the said board during the period ("the target figure"), the appropriate authority shall refer the trading practices and operations whether actual or intended of any such successor body to the Monopolies and Mergers Commission for investigation.

(3) For the purposes of this section reference to a "successor body" shall mean any body proposed by a board in a scheme of re-organisation to be engaged in milk trading and in respect of which a statement of the nature required by section (2)(c) has been submitted.'.

Dr. Strang: The new clauses are designed to focus attention on the threat posed to consumers by the arrangements following. the winding up of the milk marketing boards. The Milk Marketing Board of England and Wales will be replaced by Milk Marque—an

organisation that may well command at least 80 per cent. of the milk produced by farms in England and Wales. Equivalent bodies will replace the Northern Ireland and Scotland boards.
Completely new arrangements will operate; there will be no control over the price of milk. It has already been made clear that milk prices will rise by 20 per cent. as a direct result of the winding up of the boards. That will have a serious impact on many people: families on low incomes, with children, spend about one seventh of their total food expenditure on milk or milk products. Such an immediate and sharp increase in the price of milk is surely a matter for concern.
An important related aspect is the impact on the doorstep delivery system. One of the strengths of our present arrangements is that a substantial amount of milk is still sold on the doorstep; a sharp price increase will undoubtedly put even more pressure on the system.
It is generally believed that about 80 per cent. of farmers will join the new organisation, Milk Marque. Indeed, the figure may be nearer 90 per cent. I well understand why so many farmers are choosing to join Milk Marque. A further threat arises from the fundamental issue of EC quotas, which prevent farmers from increasing milk production in response to higher prices. In a normal marketplace, if prices rise sharply and a product becomes more profitable, the industry will produce more of it; supply relates to demand. The rigid milk quotas—a dairy farmer suffers a tremendous penalty if he exceeds his quota—pose a real threat to the future arrangements for both consumers and the dairy industry. A large, voluntary, private virtual monopoly over 80 per cent. of milk production could well operate against a background of tight quotas.
Some hon. Members will ask, "What about imports from the continent?" It is true that there is no problem with cheese and butter, in which there is a free movement of trade; but, given the cost of moving fresh milk across the channel to provide a proper service, I doubt whether anyone seriously believes that there will be an adequate brake on the dominant market power of Milk Marque. One consequence may be increased imports of UHT milk, but that remains to be seen. There is no doubt that it is a matter of serious concern that we should move from a highly regulated arrangement—which has had the support of producers, dairy companies and consumers in the past—to an unsatisfactory and unstable system.
The Government have been warned by various voices in the industry. Perhaps the new Minister was not aware of that; I shall therefore quote an observation made at the end of last year not long after the Bill was published. Mr. Brian Smith described the Bill as a
recipe for a price explosion.
He continued:
In a year when the regulatory bodies of privatised previously state monopolies have stepped in to curb price increases, the Government is creating a situation where a very dominant selling organisation of a product whose supply is fixed by quota is to have no regulatory checks and balances at all".
Mr. Brian Smith is the president of the Dairy Trade Federation, which I believe represents about 87 per cent. of the dairies in this country.
5.30 pm
To their credit, the milk marketing boards have made no secret of the fact that they intend to increase the price of milk by 20 per cent. We are worried not only about the increase in price following the winding up of the boards' arrangements but about what may happen if Milk Marque dominates and exploits the market to secure higher prices than can reasonably be justified.
On 5 March, Milk Marque launched its two-stage customer initiative, a document setting out the new arrangements for buying milk from Milk Marque. The document provoked quite a reaction and, as a result of representations from the Ministry of Agriculture, Fisheries and Food and the Office of Fair Trading, it had to backtrack to some extent. It appeared that Milk Marque was already threatening people as early as last March that if they did not sign up to buy milk from Milk Marque they might have difficulty in getting milk supplies in future. As a result of the representations, Milk Marque withdrew some of the statements in the document.
I remind the Minister of what the Dairy Trade Federation said about Milk Marque's document in its official press release of 9 March. It reads:
The Dairy Trade Federation expressed concern about the proposals by Milk Marque (the dominant private cooperative designated to succeed the Milk Marketing Board) to increase milk prices by 20 per cent.
'This proposal is exactly what we feared when we learned of the Government's proposals to remove the present statutory controls from the MMB' said DTF President Brian Smith. 'It is a monopoly using its power to increase prices to consumers…We ask the Government to set up independent supervision of this dominant monopoly'.
This is the purpose of the new clauses. A number of other new clauses, which have not been called for debate, propose a range of options, but we are not too concerned about the nitty-gritty of them; we are keen to focus attention on the dangers of the new arrangements arid to ask the Government to establish a regulatory body.
I said that the boards had made no secret of their intention to secure an increase in the price of milk. It is also fair to say that they have made no secret of the potential threat to doorstep delivery. Let me make it clear: everyone wants the service to continue and recognises that it is an important asset, which is especially valuable for the elderly and sick. It should also be maintained because many jobs are involved. It is not unique to this country, but a higher proportion of milk is sold through doorstep delivery here than in many other European countries.
In an interview on 9 March on "Farming Today", Mr. Derek Beresford was asked:
So you could see the doorstep delivery being squeezed by increased costs, lack of…supplies and more milk going into the supermarkets?
Mr. Beresford replied:
This is true. And it's something that we have to address. I, for one, and I'm sure a lot of my colleagues are wanting to…sustain the doorstep delivery as long as we possibly can.
As the House will recognise, it is all very well to want to sustain it but what counts are the hard facts of the marketplace.
Figures from the National Dairymens Association show that in 1982 about 86 per cent. of all liquid milk was sold through the doorstep delivery system. In 1992, the proportion had fallen to 56 per cent. The milk marketing board's annual accounts, which were presented the other

day, record a further dramatic fall, and I estimate that roughly half of all milk is now sold through doorstep delivery.
There must be a point at which the system becomes unviable. If there is much more of a decline in the proportion of milk sold in that way, it could have a catastrophic effect on the system. Within the framework of the new arrangements with which we are, sadly, to be saddled, the Government should surely do all they can to encourage the industry—I admit that there is probably not a great deal that they can do—to sustain the doorstep delivery service.
The problem arises out of the nature of the successor body. The options have diminished to the extent that there will be one large producer co-operative. The Minister of State rightly said that we should not lose sight of the fact that there are other companies in the marketplace. For example, Northern Foods has made clear its intention to enter directly into supply contracts with farmers. It is seeking to secure a substantial proportion—or all, if possible—of their supplies by that means, but that does not alter the fact that all the signs are that Milk Marque will account for about 80 per cent., or perhaps even 90 per cent., of the milk sold from our farms. The existence of one huge, single operator in the marketplace gives us cause for concern.
I do not believe that it is a very satisfactory long-term arrangement for the producers. The only protection is that offered by the Office of Fair Trading or the European Commission. The Commission has given an undertaking that it will not intervene for two years, and what happens then remains to be seen. That does not apply to the Office of Fair Trading, whose director general could, I suppose, intervene within a few months of the new arrangements coming into force. He could decide that there was an unsatisfactory monopoly which should be referred to the Monopolies and Mergers Commission.
I merely point out that such a situation would not be very satisfactory. It would place farmers in an insecure position if they were to join a co-operative knowing that it might soon be referred to the MMC because of its dominance over liquid milk. In view of what we are to be saddled with, there is clearly a need for a regulatory body. Regulation should not be left to the Office of Fair Trading. We should establish a body with the explicit aim of monitoring the situation, advising Ministers and, if necessary, referring the issue to the MMC.
There are alternatives. New clause 7 suggests that such a body should include as a director—if I may use that term—someone appointed by the appropriate authority. In practice, it would mean that the Scottish co-operative would include a representative from the Scottish Agriculture and Fisheries Department. The same would apply for Northern Ireland. The Milk Marque board would include a representative from the Ministry of Agriculture, Fisheries and Food who would be charged with preparing a quarterly report which would be passed to the Ministry so that a close watch could be kept on what was happening.

Mr. Geoffrey Clinton-Brown: I have listened carefully to what the hon. Gentleman has said, and I listened carefully over many weeks to what he said in Committee. I am surprised that he takes that stance on Milk Marque's dominance of the market, when the whole thrust of the Bill is to free up the


market so that any buyer can come in and buy milk if he wants to. What on earth is wrong with farmers coming together in a strong co-operative to face a market of strong buyers?

Dr. Strang: The problem is simply that whereas, under the present arrangements, there are clear controls—the price negotiated between the Dairy Trade Federation and the boards—the new situation will not be a proper free market, because quotas will control production, and a very large organisation will almost certainly be able to dominate the marketplace. That is not our fear alone; it is expressed by others in the industry, including the Dairy Trade Federation. Indeed, I have already quoted the federation to that effect.
We must not lose sight of one fundamental fact, which is more important than the boards—the existence of quotas. That control of supplies is so important because it means that the market will never operate as it should. That is why we have expressed concern. I hope that, even at this late stage, the Government will show some appreciation of the dangerous path that we could take. They should be aware of the need to be alert to what might happen and to take action to prevent the development of a milk market that could not be justified, in which consumers would be exploited and the dairy companies could set unrealistic and unjustifiable prices.

Mr. Paul Tyler: First, I add my welcome to the Minister of State, and to his right hon. Friend the new Minister of Agriculture. I hope that they have discovered from their bedtime reading of the Committee proceedings what a constructive Committee it was. There was all-party agreement on objectives, if not always total unanimity about the solutions.
I approach the new clauses tabled by the hon. Member for Edinburgh, East (Dr. Strang) with much sympathy. Clearly we are intervening in a difficult balanced market, but I feel that the hon. Gentleman is aiming at the wrong target. The threats to consumers are likely to come not from the monopolistic tendencies of Milk Marque or of the new boards in Scotland and Northern Ireland, but from a dominance of the whole market by the buyers, to which the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) obliquely referred. The problem in this country is that, for so many years, the buyers have dominated the milk market, just as they have dominated the food market.
5.45 pm
The people most concerned about the situation are the producers, to whom the hon. Member for Edinburgh, East referred. I am not sure how many dairy farmers there are in his constituency, but I have a great many in mine, and they are constantly concerned, in relation to other commodities as well as milk, about the domination of food buying and processing by a small number of huge companies—the processors and the supermarket cabals.
In recent years, as we have all seen, despite the recession in so many other areas, and the severe depression in agriculture, those companies' profits have bucked the trend and broken all bounds. Surely that is the background against which we should be concerned about what will happen to consumers. The threat to consumers comes not from 80 per cent., or even 85 per cent.. of

producers signing up with Milk Marque, but from the weakening of Milk Marque and the other boards so that they cannot exercise real power in the marketplace.
We know, too, of the growing discrepancy over the lifetime of the Government between farmgate prices—the prices that producers receive—and retail prices. That discrepancy has been created not by market boards but by retail chains and the processors behind them.
I believe that the solutions proposed by the hon. Member for Edinburgh, East are misguided. The whole concept of "Ofmilk", if I may use that shorthand description, is sour. It does not seem intelligent to impose new disciplines and boards when we are trying to improve competitiveness, vis-a-vis not only the buyers to which I have referred, but the strong organisations in other member states of the EC, where significantly. over many generations, producers have come together to form strong co-operatives.
My hon. Friends and I come in the main from farming communities, and we strongly believe that we now have the best chance, perhaps the last chance, to create a continental-style producer co-operative in this country. As hon. Members on both sides of the House have said, clearly the market will be competitive. Anyone who has met the buccaneers of the Northern Milk Partnership will know that Milk Marque will not get an easy ride.
There will be many people in the market, and the competitive restraint that they will impose, plus the important disciplines available through the Office of Fair Trading, the Monopolies and Mergers Commission and the EC Commission, will be sufficient in terms of regulatory authorities and restraint.
I believe that the hon. Member for Edinburgh, East was technically wrong when he said that the Community would not intervene for two years. The Minister gave us an explicit assurance in Committee that the Community had given an undertaking that, if there were complaints, it was prepared to intervene during the first two years of Milk Marque and the other boards. With so many organisations clearly already in the field and watching every move that Milk Marque makes, I cannot believe that there will not be a complaint if there is any real cause for concern.
I followed, with great concern, what the hon. Member for Edinburgh, East said about the milk quota. When the Bill is finally put to bed with Royal Assent, and Milk Marque and its competitors are on the road, there will still be an extraordinary marketing situation because of the quota. Again, in Committee we were given many assurances by the then Minister about the Government's future policy on quotas. I hope that those assurances will he repeated today by the new regime.
As a country, we must not dilute our efforts to ensure that the redistribution of quota among member states meets more sensibly the natural provisions and needs of each state's market requirements. It is rather absurd that quota has become so set, and so difficult to shift and adjust.
I hope—I believe that the Minister agrees with me—that, in the long term, quota can become a tradeable asset across national boundaries. I am conJinced that our producers in this country are by far the most efficient, and we have some of the best territory and climatic conditions for the production of milk, especially in Cornwall.
We are told both by the industry and by Ministers that our milk producers are the most efficient in the world, so surely they will be able to compete effectively if milk quota


becomes a buyable asset throughout the Community. We should press hard for that development; that is how we should try to loosen up the present regime for quota. We received assurances to that effect in Committee, and I hope that the Minister and his right hon. Friend will ensure that that aim remains a priority in their negotiations around the Council of Ministers table.
The issue is not how successful Milk Marque and the other boards will be in attracting producer support, nor is it whether they obtain 85 or 75 per cent. or only 51 or 49 per cent. support. The critical issue is how they use their market position.
In Committee, the Minister gave assurances that the critical criteria will be the adjudication of the proposed scheme or schemes and the way in which the organisations monitor the new regime after its vesting day. I think that there was broad support for that on both sides of the Committee.
If the regime behaves in a monopolistic way, there will be many avenues of redress for those affected by its behaviour. It would be wrong to set up yet more regulation, regulatory boards and bureaucracy at a time when industry is crying out for less.

Mrs. Elizabeth Peacock: I welcome my hon. Friend to the Dispatch Box today and to his new office of Minister of State, Ministry of Agriculture, Fisheries and Food. I am sure that he will bring his extensive experience of the food industry to his new post and that that will be an additional advantage. I also welcome my right hon. Friend the Secretary of State.
The House will recall that on Second Reading I said that my interest in manufacturing industrial matters was well known. As chairman of the all-party wool textile group, I spoke about the wool guarantee and perhaps we shall return to that subject later. For many years, I have been closely involved in the milk industry, although not in a financial way. I declare an interest in that my husband is employed by one of the largest dairy companies in the country.
One aspect of the reform of the milk marketing scheme fundamentally contradicts the principles of our party and the Government and the purpose of the Bill that we are being asked to support. We are told that the Bill's intent is to create a free market in bulk milk so that our farmers and milk processors have a stimulus to compete more effectively with our European counterparts—that is wholly acceptable and welcome. However, we are also asked to give the Minister powers to approve the creation of a monopoly milk broker, the Milk Marque, which has aspirations to control 80 per cent. of the bulk milk market of England and Wales. We would not permit a processor to control 80 per cent. of the market in England and Wales, so why are we, the party of competition, even considering allowing such a position to develop?
There is now more demand from processors for the farmer's milk than available supply and no possibility of an expansion of production to meet that demand because, since 1984, production has been reduced by 17 per cent. as a result of the EC production quotas. Those quotas are likely to tighten still further rather than relax before the end of the decade.
In those circumstances, where farmers are guaranteed a market for their milk, the creation of a monopoly broker is both unnecessary and undesirable, particularly when more than half the output goes into the fresh liquid milk

market, which is essentially a domestic market. It is not subject to foreign competition because of the cost and logistics of transporting fresh milk.
I should very much like doorstep deliveries to continue. They will continue if we use them and the more people who use them, the better the prospect for their future. Ultimately, if doorstep deliveries disappear, it will be the elderly, sick and disabled and those with small children without the capacity to go to supermarkets who will suffer. That is not a new campaign of mine—I have long campaigned for doorstep deliveries to continue. That system is often envied; some of the eastern bloc countries are looking at our scheme to see whether they can introduce similar ones.
I accept that producers need to organise themselves properly to negotiate effectively with processors. Four or five regionally based organisations would achieve that end and would, above all, safeguard the consumer against any part of the supply chain having too much power—an issue which we must all consider carefully. The establishment of a single milk brokerage more than twice the size of the second-largest buyer of milk in Europe is not imperative.
The dangers are all too obvious. Against a background of cutting costs in his organisation, the chief executive of the milk marketing board has already signalled his intention to use his monopoly power to force up milk prices by 20 per cent. when Milk Marque starts trading next year. Consumers will not thank us if that happens. What assurances are we giving consumers that that will not be allowed to happen? We are saying that, once the scheme ends, normal EC and United Kingdom competition laws will apply, leaving the competition authorities the job of sorting out a potentially unhealthy and chaotic process of our making. That is an abdication of our responsibilities. We have the power to establish a proper free market in bulk milk and now is the time to do it.
It is bizarre when it is left to the Opposition to table a new clause to ensure such a free market by limiting the size of any successor organisation. That should be a central plank of our reform as we are the party which is supposed to be committed to the principle of competition. I hope that my hon. Friend the Minister will have some reassuring comments to make when he replies. I think that new clause 8 is well worth supporting.

Mr. Campbell-Savours: The Opposition agree with much of the speech of the hon. Member for Batley and Spen (Mrs. Peacock). She has exposed what was exposed in detail in Committee—that the Bill will not create conditions of competition in the market place. As the hon. Lady said, her party has historically been wedded to principles of competition. We are being asked to accept that, having set itself the objective of securing 80 per cent. of the market of Britain's farmers and milk producers, the Milk Marque will act in the public interest. It cannot possibly act in the public interest if it has that share of the market.
I ask my hon. Friends and Conservative Members to give an example of an organisation which'has 80 per cent. of the market but which does not abuse its position. I shall give way to any Minister who can give an example where there has not been an abuse of monopoly power. The general view throughout the industry, among the Dairy Trade Federation members and all those with whom I have discussed the subject, is that there will be an abuse of


market power. The Government repeatedly told the Committee that the competition authorities which exist within the European Community, the Office of Fair Trading or the Monopolies and Mergers Commission could deal with the matter rapidly, but that is a myth. The process will not work in that way. That is why we have tabled the new clauses today.
Concern is being widely expressed about whether Milk Marque can abuse its market position. The Opposition's approach to the debate is two-pronged. We have tabled new clauses 9, 10 and 11 and amendment No. 3 to provide for a strong regulatory regime. That was a fierce approach to a potential problem, but it has not been possible to debate those issues today.
Secondly, we tabled a series of amendments to provide a weaker approach, giving Ministers the right to introduce regulations and powers to assist in establishing an orderly market. New clause 1 would introduce those powers into the Bill. They would apply in two different circumstances. The first arises where Milk Marque owns or partly owns processing facilities. The second arises where milk is supplied to processing facilities that are owned by farmers who, as producers, are nationally or regionally contracted to Milk Marque. There is concern that, in the second set of circumstances, farmers who are so contracted and are conscious of operating margins will use their milk supply power to require Milk Marque to supply processor operations in which the farmers have a shareholding. In the case of the former, would Milk Marque want to own processing facilities? Such an intention is set out in the document entitled "Rules of Milk Marque." I dealt with this point in detail in Committee. However, I believe that it will be of benefit if I draw the attention of the House once more to those rules. We believe that it is distinctly probable that, long after Mr. Andrew Dare and his formidable colleagues have retired, a future management of Milk Marque might set out to enter the processing business.
6 pm
To prove my point, the rules that will govern Milk Marque's operation once it is set up state that it wants to
carry on directly or indirectly for the benefit of its Members …including the business of producing milk cream, butter, buttermilk, cultured milk, evaporated and semi-evaporated buttermilk or cultured milk, milk-sugar…cheese, whey preparations, milk powder, condensed whole or separated milk…ice-cream, margarine and any other commodity of which milk is a substantial ingredient.
It also wants to
carry out such operations and to manufacture or deal with such goods…as may seem to the Board of Directors directly or indirectly to advance the interests of the Society…to carry on any other trade or business whatever which, in the opinion of the Board of Directors, can he advantageously carried out on, in connection with or ancillary to any of the above mentioned businesses or is calculated directly or indirectly to enhance the value of or render profitable any of the property, undertaking, rights or privileges of the Society.
I wanted to place those rules once more on the record. They prove that one day Milk Marque will own its own processing arms. We can therefore envisage that, if Milk Marque has 80 per cent. of the market and its own processing arms, it may well show preferential treatment to those processing arms.

Mr. Clifton-Brown: What is the difference between the situation of which the hon. Gentleman complains and the Co-operative Wholesale Society which is the country's largest retailer and farmer and one of this country's largest dairy producers and processors? What is the inherent difference in that situation and the situation of which the hon. Gentleman complains?

Mr. Campbell-Savours: The answer is very simple: it does not have 80 per cent. of the market and it did not set out to secure 80 per cent. of the market in any area in which it operates.
If Milk Marque succeeds, it will inevitably develop into an integrated broker and processor of milk. I am not sure whether the competition authorities in the form of the Office of Fair Trading and the Monopolies and Mergers Commission will necessarily have the power to stop that happening. I believe that Parliament may well have to exercise some influence in these matters. If the OFT and the MMC can deal with the difficulties, fair enough. However, if they cannot, powers must be available to Ministers.
New clause 1 includes the phrase:
may by regulation introduce measures".
That does not place any compulsion. The real dangers will arise when there is a milk shortage or a developing milk shortage. Professor David Harvey of Newcastle university has predicted that, by the end of the century, there may be a further cut of 20 per cent. in quota. If there is to be that level of reduction in quota in the Community—that applies equally in the United Kingdom—and milk is in short supply, it will be fought over fairly aggressively.
Over the past 10 years, there has been a 16·5 per cent. cut in quota. I understand that we may be due for a further 2 per cent. cut in quota next year. Irrespective of the predictions, we are en route for a major milk shortage. With cuts in export subsidies on processed milk and commodity products, no one will volunteer to close plants.
The marketplace will become increasingly aggressive. In those conditions, an aggressive Milk Marque will want to look after its own processor interests. The farmers who supply Milk Marque and have interests in processing plants will also want to ensure that Milk Marque provides milk to those plants.
In the new world, there will be no EC rough equivalent available, if only because the Community, during the same period, will want to cut expenditure. We cannot expect there to be a barrel of brass available to buy out processing plants in future.
I am also concerned about the investment decisions that will take place in the new world market place. Mr. Haskins of Northern Foods has said that, because of the changes that might take place in the marketplace, investment decisions that he might be considering may be deferred if not changed. Mr. Haskins said:
One thing is for sure: if farmers were to club together, with 80 per cent. to 90 per cent. of the milk, you won't find Northern Foods investing in such a climate.
One of the largest milk processors in the United Kingdom is already talking in terms of not investing—

Mr. Jack: Why did Northern Foods buy Northern Dairies?

Mr. Campbell-Savours: The Minister should ask Mr. Haskins that question. Mr. Haskins' reply would not be the one that the Minister expects.
Mr. Haskins continued:


We would invest elsewhere. We'd go to Ireland or France. Once you make an investment (we've got a £20 million UHT investment to make, for example) you are dependent on your raw material supplies.
If you are not happy about the manner in which that raw material is going to be supplied, then you'll hardly invest in the business. Why should I have to buy from a monopoly when I've only got 24 per cent. of the market?
Of course, he was being very facetious.
People in the industry in this country are already pointing with concern to the conditions that will exist in the new marketplace. The Opposition new clauses to some extent set out to redress problems which we believe Ministers have failed to address.

Mr. Jack: We have been treated to an interesting insight into Opposition competition policy. I would like to deal with some of the points raised by the hon. Member for Edinburgh, East (Dr. Strang). However, before I do that, I thank the hon. Member for North Cornwall (Mr. Tyler) and my hon. Friend the Member for Batley and. Spen (Mrs. Peacock) for their kind words of welcome.
The hon. Member for Edinburgh, East opened the argument by referring to the threat to the consumer and to questions about milk price rises.
I once earned my living buying for a supermarket. If somebody came to me and said, "The organisation of the business that we are involved in has changed and I would like to charge you 20 per cent. more for our product," I would have shown him the door. The short answer is that the people who are presently engaged in buying milk products will ensure that they can remain competitive in the marketplace. In respect of many products in which ingredients other than liquid milk products are used, consumers can make alternative purchases. That demonstrates the dynamics of the marketplace which will be opened up by this measure.
For example, yoghurt is a dessert. Many forms of dessert could be used. One could substitute a dessert for a piece of fresh fruit. That is the competitive nature of the fruit business.

Mr. Campbell-Savours: indicated dissent.

Mr. Jack: It is no use the hon. Member for Workington running away from the way in which marketplaces work and shaking his head. If he has ever pushed a supermarket trolley, he will know that such decisions must be made by the consumer. I do not believe that there will be an overnight price rise.
A large number of outcomes may befall a Milk Marque that abuses its dominant position in the marketplace. Several hon. Members mentioned the Monopolies and Mergers Commission, the Office of Fair Trading, the Director General of Fair Trading and the European Community in respect of articles 85 and 86 of the treaty. All those wait to entrap a Milk Marque which abuses its so-called dominant market position.

Dr. Strang: Is the Minister suggesting that the chief executive of the milk marketing board was not serious when he said that Milk Marque will pay 20 per cent. more for milk?

Mr. Jack: It is not my task to comment on the pricing policy that those who run Milk Marque or any other organisation care to make, in bidding up those who might seek to do business with it. The hon. Member for Workington (Mr. Campbell-Savours) commented on

Northern Foods. It is interesting to note that, on "Farming Today", when I last listened to it, Mr. Haskins said, "Come with us and you will get a better price." Clearly, people are setting out their stall to ensure that the deal that they are offering will attract supplies. In so doing, perhaps they are taking into account the fact that there will be a different marketplace for milk.
I now refer to the nature of the competitive process. If we follow the logic of what the Opposition are putting forward, we at least are removing the present totally dominant situation. The Bill would remove the existing milk marketing board, which has an absolute monopoly except in one or two cases of those who bottle, produce and sell from their own farms or those who make certain dairy products. We are introducing competition and choice. More important, we are safeguarding those who struggle to get milk supplies, for example, for those who are specialist cheese or other dairy product producers. In so doing, we are helping to enhance enterprise and opportunity.

Mr. Tyler: On the point about the regulatory and competitive framework within which Milk Marque will have to proceed, in Committee we were given an explicit assurance that the European Commission could intervene, if asked to do so, within the first two years. I want to make that point absolutely clear because it is very important to those of us who are concerned about the framework.

Mr. Jack: I have studied the matter with care and I have read the letter which Sir Leon Brittan has written on the subject. As the hon. Gentleman knows, that letter was sent to my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), the previous Minister of Agriculture, Fisheries and Food. Sir Leon Brittan says, "I have looked at the proposals and I am prepared to stay my hand subject to certain factors, for example the determination of the terms upon which people may leave Milk Marque as suppliers." However, he also says, "I will be keeping a close eye on what is going on, and if people complain to me that there is abuse of a dominant market position, I do not fetter my hand to act if necessary," That must equally be the situation that the Director General of Fair Trading will face. A lot of people will be watching.
The hon. Member for Workington told us of the hidden agenda. With his forensic approach to politics, he dearly loves to find so-called hidden agendas and new truths. The hon. Gentleman has been a company director; he understands such matters. From the articles of association of the business that he was involved in, he will know that a business lays out the full scope of what it might like to do in future. Therefore, Milk Marque would not wish to fetter its position if, to come back to the dynamics of the competitive market, things begin to change.
I am sure that, initially in year one, Milk Marque will attract a large number of milk suppliers, but they, being canny farmers, will be looking over the proverbial hedge to see how their mates are doing. If they are doing rather well because they have signed up with a local co-operative supplying a local dairy or any other organisation that cares to bid for their milk, they might exercise their rights to move. Milk Marque might find that the situation changes and that the nature of the business needs to adapt.
The Opposition's dinosaur approach to politics would not allow Milk Marque the ability to change. Goodness


knows what the consequences might be. That shows that the Opposition do not understand the dynamics of the marketplace and how they can work to safeguard the interests of small producers, for example, and how the marketplace will deal with price.

Mr. Campbell-Savours: May I ask the Minister a very simple question? We can accept his allegation that we do not know how the marketplace works, but do members of the Dairy Trade Federation—the people who do the processing in the industry, who have briefed us in detail and indeed written several of the amendments that were moved in Committee—also know nothing about the business, or is it just the Minister who understands those matters?

Mr. Jack: When people have enjoyed a relatively cosy and intimate relationship, as the DTF and the milk marketing board have done for many years, would not one expect them to try to argue for the status quo? Life is so much easier. We are opening up the industry and addressing the central point of the Opposition's argument. If the Opposition are concerned about the dominant market position, why did they vote against breaking up the body which has the dominant market position—the milk marketing board?

Dr. Strang: There is all the difference in the world between a regulated monopoly in which there is a law that lays down the conditions and a price is agreed between the Dairy Trade Federation and the board, and the voluntary free market that we are moving into. There are no restraints at all on the companies and co-operatives in the new market situation. It is like going back to publicly owned utilities, with a monopoly, public ownership, tight control, and then moving to private ownership. There is absolutely no comparison. The Minister cannot say that there is a contradiction. The Bill is bound to wind up the boards, so we should look at the new circumstances.

Mr. Jack: I am glad that the Opposition are looking at the new system. The Opposition's amendments—some of them were not selected—provided a window to the new Opposition thinking. Whenever there appears to be domination of one group as against another in the marketplace, they want a directorate-general and they want to start setting prices for products. They are missing the dynamics of the competitive process. If, in years two, three, four or five, other organisations which are presently bidding for supplies of milk do better than Milk Marque, who knows what will happen? Those processes are the best safeguard against the abuse of a dominant position, backed by clear law in respect of the way in which the Monopolies and Mergers Commission and indeed the European Community can act. I can think of no greater sword of Damocles hanging over the new organisation than those very powerful pieces of law. The central issue is that the Conservative party introduced competition to break down the dominant market.
The hon. Member for Edinburgh, East asked about doorstep deliveries. When I go home, I relish the visits of Mr. Morris, our local milkman. He would be deeply distressed if I said something that put his livelihood at risk. Mr. Morris will be delighted that the abolition of the milk marketing boards means that the dreaded 2p levy that he

has to pay will disappear. That will improve the competitiveness of his business. I have noticed that Mr. Morris's business has expanded over the years, as have those of many others who make doorstep deliveries. All kinds of goods are available for the convenience of the consumer, because those who make doorstep deliveries realise that they are in a highly competitive market. The argument has been that, as supermarkets have entered the milk business, those who make doorstep deliveries have had to adapt, and they have adapted. Some have said that they wished to retain the convenience of doorstep deliveries—others have found it better to buy milk from a supermarket. Conservative Members believe in choice. Equally, I am glad that those who make doorstep deliveries have reacted.

Mr. Andrew Welsh: Will the Minister confirm a Government commitment to a Scottish milk development council if the industry wished to set one up?

Mr. Jack: We shall look at all the proposals when we have a clear sight of what is to succeed the present system. I am aware of the interest in development councils and will examine the proposition.
I was about to comment on a point about the dynamics of competition. The hon. Member for Edinburgh, East asks whether there is a possibility of milk coming from abroad. A French producer, for example, may decide, as a result of the lower labour costs and competitive manufacturing environment that we have created on this side of the channel, to establish a factory here. That factory might produce high value-added dairy products and the producer might think that the transport cost of approximately 5p to move milk from mainland Europe to within 100 miles of Calais may be worth doing. Who knows? There is always that possibility.
Equally, I can reassure the hon. Member for North Cornwall, who made an important point about milk quotas. My right hon. Friend the Minister and I commit ourselves firmly to continuing to campaign for what is good for Britain and the dairy industry in terms of the future of quotas. The hon. Gentleman raised an important point and we are very much wedded to that. We understand some of the imbalances in the Community and there are longer-term agreements. We shall want to campaign for what is best for Britain.

Mr. William Cash: Will the Minister be good enough to confirm that the increase in quotas for Greece and Italy which has not been properly supervised militates against the interests of British milk producers, particularly the large number in my constituency? We cannot allow the situation to be perpetuated. I accept that the Government want to campaign for Britain, but will they do something about it?

Mr. Jack: I am disappointed that as assiduous a European student as my hon. Friend has not reflected on the facts. The uncovering of the activities in Italy has meant, first, that £70 million has been returned to the Commission and, secondly, a reduction in the Italian total production of milk products. They have had an increase in their formal quota, but as a result 1·76 million tonnes of milk will be taken out of production. As a further bonus to farmers in his constituency, the I per cent. reduction in milk quotas did not occur. I call that a tour de force for


those of us who are trying to stop abuse in the Community. I am glad that my hon. Friend raised the question and I hope that he will accept the answer.
My hon. Friend the Member for Batley and Spen at heart has some sympathy with new clause 8. The idea of an automatic referral if Milk Marque got 50 per cent. of the milk supply before the process of vesting was continued would cause tremendous disruption in the industry. I do not think that that would be widely welcomed. It also gives rise to an interesting point: what happens if other organisations are as successful as she expects Milk Marque will be? Would she want those to be referred?

Mrs. Peacock: Certainly.

Mr. Jack: My hon. Friend says that she would, but I think that people want a speedy resolution of the matters. Bearing in mind what I have said to my hon. Friend about competition law, I hope that she will accept that we shall be looking carefully at the interests of all concerned. Much of what has been said by my hon. Friend and others will be in the minds of Ministers when they look at the schemes. The fact that the company that she refers to is now in the business of bidding for its supplies of milk shows us clearly that we have entered a competitive situation. The company could not previously have secured its own supplies of milk. I believe that it welcomes that. It would not have made an investment such as the purchase of Express Dairies if it had not seen a long-term future in the dairy industry.
The hon. Member for Workington mentioned a number of the new clauses. He and the hon. Member for Edinburgh, South both referred to new clause 7. I thought that they might be campaigning for new jobs as representatives on the board from north and south of the border respectively. Theirs is not a terribly sensible idea. The amendments that they have tabled do not take forward the role of the so-called place person on the new board in any meaningful sense. I do not think that the proposals would add in any way to safeguarding the interests of the people in whom they claim to be interested. The points that I have made on competition law would do far more to discipline the minds of Milk Marque in the future than the ideas that those hon. Gentleman have put before the House this evening.
For all those reasons, I believe that we have put an unassailable case before the House this evening. The dynamics of the marketplace will safeguard against the fears that Opposition Members have put forward. The law on competition and the threat of investigation from the EC are powerful safeguards against abuse. Opposition Members have not looked far enough forward to see what would happen in the development of the milk business. Their amendments would fetter that development; ours would encourage it.

Question put and negatived.

New clause 6

DISPUTES PROCEDURE

.—(1) The appropriate authority shall not approve a scheme of reorganisation unless the terms of purchase and supply of each successor body proposed to be engaged in milk trading make provision for the resolution of disputes between such a successor body, these purchasing milk from it and those supplying milk to it.

(2) For the purposes of this section reference to a "successor body" shall mean any body proposed by a board in a scheme of re-organisation to be engaged in milk trading and in respect of which a statement of the nature required by section (2)(c) has been submitted.'.—[ Mr. Campbell-Savours. ]

Brought up, and read the First time.

Mr. Campbell-Savours: I beg to move, That the clause be read a second time.

Mr. Deputy Speaker: With this it will be convenient to discuss also amendment No. 83, in clause 3, page 3, line 27, at end insert
'(aa) Whether the scheme makes sound provision for the settlement of diputes between the successor body and its customers;'.

Mr. Campbell-Savours: In winding up a few moments ago, the Minister used an interesting phrase. He said, "I think what people want is a speedy resolution of these matters." That is precisely what the new clauses are about. New clause 6 is particularly important to the processors as they move into a free market. The Government keep on saying, and said again today, that if the membership of the DTF—the processors and dairies—is concerned about what happens in the market, it can use the courts, the Office of Fair Trading, or the Monopolies and Mergers Commission, or it can go to the EC's regulatory authority. Of course, we all know that that is a long-drawn-out process and that much damage can be done in the interim period unless a proper disputes procedure is set up. The new clauses deal specifically with that disputes procedure.
Hon. Members may need to be reminded of what the previous Secretary of State said on those matters when we debated the Bill on 23 March this year. I asked whether Ministers had ruled out arbitration for the disputes procedures. The former Secretary of State replied:
In advance of the board's proposals I would not like to say that I have ruled out anything of that nature but I see no role at the moment for further statutory interference in the way in which the market will operate. I shall certainly not be dogmatic as I am not a dogmatic person."—[Official Report, 23 March 1993; Vol. 221, c. 793.]
Those are the words of the former Minister, to whom I refer as a Secretary of State. That is what he was and what the right hon. Lady now is. So much for dogmatism. In Committee, we saw no movement at all on the question of disputes procedure.
We have no fast-track approach to sort out problems such as unreasonable refusal to supply, disputes about the use of assets as marketing tools—we debated that issue at length in Committee—the poaching of contracts, the selective predatory pricing to producers and perhaps even unreasonable collection and delivery conditions. To some extent, collection problems can be dealt with in Milk Marque's own rules. Curiously enough, Milk Marque's rules provide for a disputes procedure, but, in the main, deal only with internal matters.
Section 19 of the Agricultural Marketing Act 1958 provides for consumer and investigation committees, to which reference has already been made. However, they are to be wound up under this non-statutory arrangement. The scheme proposed by the milk marketing board provides for a joint committee and an arbitration procedure. The problem with that scheme is that a draft scheme of reorganisation, which is not statutory, does not provide for a joint committee or arbitration. Therefore, there is no machinery in place to deal with the issue of disputes.
6.30 pm
What can we do if Milk Marque gets too big for its boots and finds itself embroiled in disputes? The answer is to insist on a procedure for the resolution of disputes to be clearly defined at the time that a scheme is approved. The Minister will have to do that because, effectively, he will approve the schemes. He can say to those who submit schemes, "I require that a disputes procedure in which I have confidence be inserted in the scheme before I approve it." The matter is in his hands.
The Dairy Trade Federation supports new clause 6. I quote:
The DTFs concerns about dispute resolution under new milk marketing arrangements stems from the anticipation, on the Board's own reckoning, that their successor is likely to command a high percentage of the market in the supply of raw milk…Sub-clause I would require each successor body of a Milk Marketing Board to make provision for the settlement of disputes and for the appropriate authority not to approve a scheme of re-organisation without such provision. The arrangement for dispute resolution would cover not only those purchasing milk from a successor body, but also those supplying milk to it. At the heart of the proposal lie concerns that disputes relating to volume and supply can be speedily dealt with, rather than requiring the parties concerned to engage in lengthy court proceedings, possibly after the supply has been cut off.
Amendment No. 83 would further extend the principles that I am arguing in this debate and contains another disputes procedure. That disputes procedure is from the Unigate stable. When Ministers determine whether schemes should be approved, Unigate wants them to have regard to whether the scheme. makes sound provision for the settlement of disputes, as is the case of the more widely represented Dairy Trade Federation.
On the referee issue, the Dairy Trade Federation proposes that the milk marketing boards' sale and conditions arbitration procedure set out in rule No. 30, effective from I May 1991, should be applied in the case of schemes approved by the Minister and suggests that a requirement to use that procedure must be built into the approval that Ministers might give. I do not know if the Minister is aware of that procedure—I understand that he has had to do a lot of reading since his new appointment. If he is not aware of it, I shall quote precisely what Unigate says:
Unigate believe that a referee is necessary to safeguard the interests of producers of milk…Various suggestions have been made re a 'Referee' ranging from an 'OFMILK', to a supervisory body, to retaining the type of arbitration arrangements that exist between the MMB and milk buyers collectively…While Unigate recognises that there arc wider issues involved and that there are advantages and disadvantages to all of these options, Unigatc believes that there is a simpler approach which would satisfy those concerns, i.e.: Compulsory arbitration between individual purchasers, buyers of milk and Milk Marque, if a dispute were to arise which could not be resolved in any other way. The MMB current sale conditions currently provide for this type of arbitration between an individual buyer and the MMB (with the parties deciding on their own arbitrators).
Is it possible for such an arrangement to be built into whatever approvals are decided by Ministers, or are they prepared to go further in the way that I have suggested in new clause 6 with perhaps a more substantial power?

Mr. Jack: I have listened to the impassioned pleadings of the hon. Member for. Workington for a variety of approaches to the question of the resolution of disputes. On the basis of what he said, I am not persuaded that there

is a need for us to go beyond the normal way of dealing with disputes in situations of competition which will be created by the removal of milk marketing boards.
The flaw in the forensically based argument of the hon. Gentleman is that he seeks to impose a raft of new ideas on Milk Marque but does not reflect on the fact that there will be others in the business. Other people who are competing for supplies of milk will have to lay out to their prospective suppliers the terms on which they will do business. If I were one of them, a question that I, as a farmer who is used to buying a whole range of supplies for my enterprise, would ask is: what happens if I fall out with a supplier? I would want to investigate that.
I would want to examine the terms of trade—this shows the lack of understanding of Opposition Members of the way in which markets work. I am sure that one of the factors that may affect farmers in deciding their point of supply is the basis of the contract and what it says on these matters. I would want to make an informed judgment. For example, I might want to get my adviser to say, "Which of these processes will be the fairest to you?"
As a knowing and commercial man and one who has been in business for some time, I would know what to look out for in terms of a dispute and the resolution of such difficulties. The hon. Gentleman knows that arbitration in normal commercial terms is one route. Another route is legal action. His point was that those processes could take some time and that continuing practical day-to-day difficulties may result. He will know that the Department of Trade and Industry made an announcement on 14 April which pointed the way forward for a more developed and selective way in which competition policy might address some of those internal difficulties. As a humble Agriculture Minister, it is not for me to trespass into those areas, but it shows the Government's thinking to ensure that competition policy can deal with those matters.
My predecessor also mentioned the possible extension of the Competition Act 1980 into those areas. He rightly did not fetter his hand on that until he saw precisely the final scheme put forward by the milk marketing boards. If we look into the near distance, we can see some hopeful possibilities for dealing with some of those issues. But it is not our view—this is the central issue—that there is a requirement for new mechanisms to deal with such disputes. Farmers are business people. They understand what they are letting themselves in for and will read the fine print.

Mr. Campbell-Savours: Does the Minister accept that it is more likely that there will be a dispute when one is dealing with the operations of a voluntary monopoly, which might control 80 per cent. of the market, than in other conditions, in which the supplying organisation has a far smaller share of the market? Does he accept that the scale of share would aggravate the condition that could lead to a dispute?

Mr. Jack: The short answer is that the scale of share would aggravate the position only if the person who had the dominant position abused that position by unfair actions. That brings us precisely back to the arguments about the operation of competition policy. Such unfair actions would be an abuse of the privileges of having a dominant position.
The hon. Gentleman should examine any personal circumstances in which he has been in dispute with people


in trade matters. He will find that disputes occur in the normal day-to-day business dealings of small or large companies. II is interesting to note that many large companies are trying hard to improve their customer relations because they wish to minimise the besmirchment of their otherwise excellent record in matters of dispute. Urged on by the Government's excellent initiative on the citizens charter, many people are opening up the ways in which they deal with complaints. Perhaps the hon. Gentleman does not give weight to that point.

Mr. Campbell-Savours: It is a good example.

Mr. Jack: I am glad that the hon. Member says that it is a good example because the example is percolating its way into the private sector, into which we hope that supplies of milk will go.

Mr. Tyler: The Minister cast the hon. Member for Workington (Mr. Campbell-Savours) in the role of a latter-day Sherlock Holmes with forensic skills. I see him more in the role of an old testament prophet producing 10 commandments in the land flowing with milk and honey. The new clause is over-reaction and over-regulation.
There is a serious point here. I listened carefully to the Minister's response. His predecessor admitted on several occasions in Committee that we were in a sensitive transition from a robustly managed market into what we hoped would be a more competitive market. As both Opposition and Conservative Members acknowledge, that transition inherently contains stresses and strains.
The Minister's predecessor said in Committee that he would examine the scheme that was suggested. He said that he would not prejudge it because, as he rightly said, that would impede his judicial role when the scheme came before him in due course. However, he said that it was important to consider ways in which disputes could be avoided, not merely resolved, under the terms of the scheme.
I took the point made by the Minister today about the proposals that have been made by the Department of Trade and Industry. I hope that those proposals will be helpful in this and other matters. The central point is surely this. We do not seek to over-regulate. We are trying to reduce regulation and free up a market. It must be done in a way that does not damage any parties that we can help. But to include in the Bill some provision which would impede the progress towards a freer market would he a retrograde step.

Question put and negatived.

New clause 8

FUTURE REGULATION (No. 2)

.—(1) In the case of a scheme of re-organisation submitted by the Milk Marketing Board of England and Wales it shall be a requirement of any approval of such a scheme that on vesting day or, if the target figure specified in subsection (2) below is attained before that date then on the day it is attained, the appropriate authority shall be advised by any successor body to the said board of the names of the producers contracting to supply milk to it and by the said board of the volume of milk which those producers had sold to it in the year 1st April 1992 to 31st March 1993 ("the period") and the total volume of milk sold to it during the period.

(2) Where the milk sold to the said hoard during the period by the producers contracting to supply a successor body represents 50 per cent. or more of the total volume of milk

sold to the said board during the period ("the target figure"), the appropriate authority shall refer the trading practices and operations whether actual or intended of any such successor body to the Monopolies and Mergers Commission for investigation.

(3) For the purposes of this section reference to a "successor body" shall mean any body proposed by a board in a scheme of re-organisation to be engaged in milk trading and in respect of which a statement of the nature required by section (2)(c) has been submitted.'.—[Dr. Strung.]

Brought up, and read the First time.

Motion made—[Dr. Strang]—and Question put, That the clause be read a Second time:—

The House divided.. Ayes 150, Noes 269.

Division No. 305]
[6.43 pm


AYES


Adams, Mrs Irene
Hinchliffe, David


Ainger, Nick
Hoey, Kate


Ainsworth, Robert (Cov'try NE)
Howarth, George (Knowsley N)


Armstrong, Hilary
Howells, Dr. Kim (Pontypridd)


Ashton, Joe
Hoyle, Doug


Austin-Walker, John
Hughes, Kevin (Doncaster N)


Banks, Tony (Newham NW)
Hughes, Robert (Aberdeen N)


Barron, Kevin
Hughes, Roy (Newport E)


Battle, John
Hutton, John


Bayley, Hugh
Jackson, Glenda (H'stead)


Benn, Rt Hon Tony
Jackson, Helen (Shef'ld, H)


Bennett, Andrew F.
Jones, Barry (Alyn and D'side)


Benton, Joe
Jones, Jon Owen (Cardiff C)


Bermingham, Gerald
Jones, Lynne (B'ham S O)


Bray, Dr Jeremy
Jowell, Tessa


Brown, N. (N'c'tle upon Tyne E)
Keen, Alan


Burden, Richard
Kennedy, Jane (Lpool Brdgn)


Byers, Stephen
Khabra, Piara S.


Caborn, Richard
Kilfoyle, Peter


Callaghan, Jim
Kinnock, Rt Hon Neil (Islwyn)


Campbell, Mrs Anne (C'bridge)
Lestor, Joan (Eccles)


Campbell, Ronnie (Blyth V)
Lewis, Terry


Campbell-Savours, D. N.
Livingstone, Ken


Cann, Jamie
Lloyd, Tony (Stretford)


Clapham, Michael
Loyden, Eddie


Clarke, Tom (Monklands W)
McAllion, John


Clelland, David
McAvoy, Thomas


Clwyd, Mrs Ann
McCartney, Ian


Connarty, Michael
McFall, John


Corbyn, Jeremy
McKelvey, William


Cousins, Jim
Mackinlay, Andrew


Cryer, Bob
McLeish, Henry


Cunningham, Jim (Covy SE)
Mahon, Alice


Dalyell, Tarn
Mandelson, Peter


Davidson, Ian
Marshall, Jim (Leicester, S)


Davies, Ron (Caerphilly)
Maxton, John


Davis, Terry (B'ham, H'dge H'l)
Meale, Alan


Dewar, Donald
Michael, Alun


Dixon, Don
Michie, Bill (Sheffield Heeley)


Dobson, Frank
Milburn, Alan


Dowd, Jim
Morgan, Rhodri


Dunwoody, Mrs Gwyneth
Morley, Elliot


Eagle, Ms Angela
Mudie, George


Enright, Derek
Mullin, Chris


Etherington, Bill
Murphy, Paul


Evans, John (St Helens N)
O'Brien, Michael (N W'kshire)


Fatchett, Derek
O'Brien, William (Normanton)


Flynn, Paul
O'Hara, Edward


Foster, Rt Hon Derek
Peacock, Mrs Elizabeth


Foulkes, George
Pike, Peter L.


Fyfe, Maria
Pope, Greg


Galloway, George
Powell, Ray (Ogmore)


Gerrard, Neil
Prentice, Ms Bridget (Lew'm E)


Golding, Mrs Llin
Prentice, Gordon (Pendle)


Gordon, Mildred
Prescott, John


Griffiths, Nigel (Edinburgh S)
Primarolo, Dawn


Griffiths, Win (Bridgend)
Purchase, Ken


Grocott. Bruce
Quin, Ms Joyce


Hain, Peter
Raynsford, Nick


Hardy, Peter
Robertson, George (Hamilton)


Hill, Keith (Streatham)
Roche, Mrs. Barbara






Rogers, Allan
Turner, Dennis


Rooker, Jeff
Walley, Joan


Rowlands, Ted
Wardell, Gareth (Gower)


Ruddock, Joan
Wicks, Malcolm


Sheerman, Barry
Williams, Rt Hon Alan (Sw'n W)


Sheldon, Rt Hon Robert
Williams, Alan W (Carmarthen)


Short, Clare
Wilson, Brian


Simpson, Alan
Winnick, David


Skinner, Dennis
Wise, Audrey


Smith, Andrew (Oxford E)
Worthington, Tony


Soley, Clive
Wray, Jimmy


Spellar, John
Wright, Dr Tony


Steinberg, Gerry



Strang, Dr. Gavin
Tellers for the Ayes:


Taylor, Mrs Ann (Dewsbury)
Mr. Eric Illsley and Mr. Gordon McMaster.


Tipping, Paddy





NOES


Ainsworth, Peter (East Surrey)
Douglas-Hamilton, Lord James


Alison, Rt Hon Michael (Selby)
Dover, Den


Allason, Rupert (Torbay)
Duncan, Alan


Amess, David
Duncan-Smith, Iain


Arbuthnot, James
Dunn, Bob


Arnold, Jacques (Gravesham)
Durant, Sir Anthony


Ashby, David
Dykes, Hugh


Ashdown, Rt Hon Paddy
Eggar, Tim


Aspinwall, Jack
Evans, Jonathan (Brecon)


Atkinson, David (Bour'mouth E)
Evans, Nigel (Ribble Valley)


Atkinson, Peter (Hexham)
Evans, Roger (Monmouth)


Baker, Rt Hon K. (Mole Valley)
Evennett, David


Baker. Nicholas (Dorset North)
Faber, David


Baldry, Tony
Fabricant, Michael


Banks, Matthew (Southport)
Fenner, Dame Peggy


Bates, Michael
Field, Barry (Isle of Wight)


Bendall, Vivian
Fishburn, Dudley


Beresford, Sir Paul
Forman, Nigel


Biffen, Rt Hon John
Forsyth, Michael (Stirling)


Body, Sir Richard
Forth, Eric


Bonsor, Sir Nicholas
Foster, Don (Bath)


Booth, Hartley
Fox, Dr Liam (Woodspring)


Boswell, Tim
Fox, Sir Marcus (Shipley)


Bottomley, Peter (Eltham)
Freeman, Rt Hon Roger


Bowden, Andrew
French, Douglas


Bowis, John
Fry, Peter


Boyson, Rt Hon Sir Rhodes
Gale, Roger


Brandreth, Gyles
Gallie, Phil


Brazier, Julian
Gardiner, Sir George


Bright, Graham
Garnier, Edward


Brooke, Rt Hon Peter
Gillan, Cheryl


Brown, M. (Brigg & Cl'thorpes)
Goodson-Wickes, Dr Charles


Browning, Mrs. Angela
Gorst, John


Bruce, Ian (S Dorset)
Greenway, John (Ryedale)


Bruce, Malcolm (Gordon)
Griffiths, Peter (Portsmouth, N)


Burns, Simon
Grylls, Sir Michael


Burt, Alistair
Hague, William


Butcher, John
Hamilton, Neil (Tatton)


Butler, Peter
Hampson, Dr Keith


Campbell, Menzies (Fife NE)
Hanley, Jeremy


Carlisle, Kenneth (Lincoln)
Hannam, Sir John


Carrington, Matthew
Haselhurst, Alan


Carttiss, Michael
Hawkins, Nick


Cash, William
Hawksley, Warren


Clappison, James
Heathcoat-Amory, David


Clark, Dr Michael (Rochford)
Hicks, Robert


Clarke, Rt Hon Kenneth (Ruclit)
Higgins, Rt Hon Sir Terence L.


Clifton-Brown, Geoffrey
Horam, John


Coe, Sebastian
Hordern, Rt Hon Sir Peter


Congdon, David
Howard, Rt Hon Michael


Conway, Derek
Howarth, Alan (Strat'rd-on-A)


Coombs, Anthony (Wyre For'st)
Howell, Rt Hon David (G'dford)


Coombs. Simon (Swindon)
Howell, Sir Ralph (North


Couchman, James
Norfolk)


Cran, James
Hughes Robert G. (Harrow W)


Currie, Mrs Edwina (S D'by'ire)
Hughes, Simon (Southwark)


Curry, David (Skipton & Ripon)
Hunt, Sir John (Ravensbourne)


Davis, David (Boothferry)
Hunter, Andrew


Day, Stephen
Hurd, Rt Hon Douglas


Deva, Nirj Joseph
Jack, Michael


Devlin, Tim
Jackson, Robert (Wantage)


Dicks, Terry
Johnson Smith, Sir Geoffrey





Jones, Gwilym (Cardiff N)
Roberts, Rt Hon Sir Wyn


Jones, Nigel (Cheltenham)
Robertson, Raymond (Ab'd'n S)


Jones, Robert B. (W Hertfdshr)
Robinson, Mark (Somerton)


Kellett-Bowman, Dame Elaine
Roe, Mrs Marion (Broxbourne)


Kennedy, Charles (Ross,C&S)
Rowe, Andrew (Mid Kent)


Kilfedder, Sir James
Ryder, Rt Hon Richard


King, Rt Hon Tom
Sackville, Tom


Kirkhope, Timothy
Sainsbury, Rt Hon Tim


Kirkwood, Archy
Scott, Rt Hon Nicholas


Knapman, Roger
Shaw, David (Dover)


Knight, Mrs Angela (Erewash)
Shaw, Sir Giles (Pudsey)


Knight, Greg (Derby N)
Shephard, Rt Hon Gillian


Knight, Dame Jill (Bir'm E'st'n)
Shepherd, Colin (Hereford)


Knox, Sir David
Shepherd, Richard (Aldridge)


Kynoch, George (Kincardine)
Sims, Roger


Lait, Mrs Jacqui
Skeet, Sir Trevor


Lang, Rt Hon Ian
Smith, Tim (Beaconsfield)


Lawrence, Sir Ivan
Smyth, Rev Martin (Belfast S)


Leigh, Edward
Soames, Nicholas


Lennox-Boyd, Mark
Speed, Sir Keith


Lester, Jim (Broxtowe)
Spencer, Sir Derek


Lidington, David
Spicer, Michael (S Worcs)


Lightbown, David
Spink, Dr Robert


Lloyd, Peter (Fareham)
Sproat, Iain


Lord, Michael
Squire, Robin (Hornchurch)


Luff, Peter
Stanley, Rt Hon Sir John


Lyell, Rt Hon Sir Nicholas
Steen, Anthony


Lynne, Ms Liz
Stephen, Michael


MacGregor, Rt Hon John
Stern, Michael


Maclean, David
Stewart, Allan


Maclennan, Robert
Streeter, Gary


McLoughlin, Patrick
Sumberg, David


McNair-Wilson, Sir Patrick
Sweeney, Walter


Madel, David
Sykes, John


Maitland, Lady Olga
Tapsell, Sir Peter


Mans, Keith
Taylor, Ian (Esher)


Marland, Paul
Taylor, John M. (Solihull)


Marshall, John (Hendon S)
Taylor, Matthew (Truro)


Martin, David (Portsmouth S)
Temple-Morris, Peter


Mates, Michael
Thomason, Roy


Mawhinney, Dr Brian
Thompson, Sir Donald (C'er V)


Merchant, Piers
Thompson, Patrick (Norwich N)


Michie, Mrs Ray (Argyll Bute)
Thornton, Sir Malcolm


Milligan, Stephen
Thurnham, Peter


Mitchell, Andrew (Gedling)
Townsend, Cyril D. (Bexl'yh'th)


Mitchell, Sir David (Hants NW)
Tredinnick, David


Moate, Sir Roger
Trend, Michael


Molyneaux, Rt Hon James
Twinn, Dr Ian


Monro, Sir Hector
Tyler, Paul


Montgomery, Sir Fergus
Viggers, Peter


Nelson, Anthony
Waldegrave, Rt Hon William


Neubert, Sir Michael
Walden, George


Newton, Rt Hon Tony
Wallace, James


Nicholls, Patrick
Waller, Gary


Nicholson, David (Taunton)
Ward, John


Nicholson, Emma (Devon West)
Wardle, Charles (Bexhill)


Norris, Steve
Wells, Bowen


Oppenheim, Phillip
Wheeler, Rt Hon Sir John


Ottaway, Richard
Whitney, Ray


Page, Richard
Whittingdale, John


Paice, James
Widdecombe, Ann


Patnick, Irvine
Wilkinson, John


Patten, Rt Hon John
Willetts, David


Pawsey, James
Wilshire, David


Pickles, Eric
Winterton, Mrs Ann (Congleton)


Porter, Barry (Wirral S)
Winterton, Nicholas (Macc'f'ld)


Porter, David (Waveney)
Wolfson, Mark


Portillo, Rt Hon Michael
Wood, Timothy


Powell, William (Corby)
Yeo, Tim


Rathbone, Tim
Young, Rt Hon Sir George


Redwood, Rt Hon John



Rendel, David
Tellers for the Noes:


Renton, Rt Hon Tim
Mr. Sydney Chapman and Mr. Andrew MacKay.


Richards, Rod



Ritkind. Rt Hon. Malcolm

Question accordingly negatived.

Clause 3

DETERMINATION OF APPLICATIONS

Mr. Campbell-Savours: I beg to move amendment No. 4, in page 3, line 15, after 'principles', insert 'and details'.

Madam Deputy Speaker (Dame Janet Fookes): With this it will be convenient to discuss the following amendments: No. 6, in clause 4, page 4, line 20, after 'above', insert
'following consultation with parties likely to be affected directly or indirectly by the proposed modifications'.
No. 7, in page 4, line 26, at end insert
', and it shall also give then a statement as to what consultation has taken place with producers, consumers, retailers and purchasers as to the proposed modifications.'.
No. 8, in page 4, line 36, at end insert—
'(d) provided the authority with a statement as to the nature of any consultations which have taken place with those producers, retailers, consumers and purchasers of milk as it thinks appropriate on the proposed modifications.'.

Mr. Campbell-Savours: This set of four amendments is about the issue of consultation. It follows a long series of debates in Committee where we repeatedly raised the question of consultation. We raised the profile of the issue because throughout our own consultation with the industry and our discussions with people in the industry, in particular the processors, we repeatedly heard comment on the lack of consultation. In Committee the Minister told us that a particular organisation had been consulted but the two representatives of that organisation, sitting at the back of the Committee Room, shook their heads. So great has been the misunderstanding of Ministers about their responsibilities to outside organisations.
The Government have dragged their feet on consultation since the beginning with the result that at one stage or another. in the process the dairy trade, food manufacturers, retailers and producers have all expressed opposition to aspects of the Bill. We are entitled to know why the Government have been so tardy. Why have we had to drag Ministers, struggling, protesting and bickering, through the hoop of consultation? Even today the Bill says far too little about consultation.
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Furthermore, it makes totally inadequate provision for approved applications to be endorsed by the House of Commons. I accept that paragraphs (a) and (b) of clause 3(2) refer to the principle of consultation, saying that the authority must be satisfied
that the board has taken reasonable steps to bring the principles of the schemes to persons who are registered producers
and referring to the fact that the authority must consult purchasers, producers, retailers and consumers about the principles of the scheme. However, the provision is far too limited. The prospect of an unregulated monopoly fiercely requires the placing on the Government of an obligation to consult. And the consultation must be on principles, and not just about the details of the scheme.
Details of the scheme could arguably include the machinery for fixing prices; the arrangements for dealing with shortages in the market place; the standards of quality of milk sold by Milk Marque; the provision, or otherwise, of an independent arbitration or disputes

procedure, as referred to in another amendment; the availability to producers outside the scheme of any assets that might be retained by Milk Marque, such as National Milk Records, Genus and Central Testing, which, as I said to Ministers at the Committee stage, would amount to a questionable placing of those assets; the arrangements in an over-supplied market where supplies might be rationed, as referred to in the intention to purchase document that the milk marketing board sent out to prospective buyers in March; the approach to be adopted by the milk marketing board and the residuary body to outstanding claims; the question of the incurring of expenditure by the Milk Marketing Board on the promotion of Milk Marque, which I understand to be causing quite some comment in the farming press of the United Kingdom; the attitude to be taken by Milk Marque to the supply of milk in conditions of vertical integration with processor plants in the future, in the way that I was suggesting in the debate on earlier amendments; the provision that is being made for the pensioners of the board's existing operation, which is to be dealt with in an amendment to be moved by my hon. Friend the Member for Sherwood (Mr. Tipping); and the treatment of direct sellers, some of whom remain uneasy about certain aspects of the Bill, despite the fairly substantial, concessions that the Government have been prepared to make.
There are several areas in which future arguments should be avoided at all costs. To avoid those arguments, if we are not to have the disputes procedure for which we have argued today, we must have a proper process of consultation. Why should the industry have to worry about this potential lack of consultation in the future? I do not know whether the Minister has read the comments that Lord Howe made in another place. The noble Lord said that the principles of the scheme are its main elements—those elements that are enough to give a sufficient picture of the scheme as a whole so that consultees can reasonably be expected to form the view without needing the full details before them. The noble Lord said that excluded would be, for example, details such as the schedule of properties or the commercially sensitive and confidential elements of the scheme.
I remind the Government that this is enabling legislation and that Parliament is having its last say. In the wider sense of the approval of schemes, these matters will not come before us again. If only for that reason, there is a real need for the most sophisticated type of consultation procedure to be put in place. We need the fullest possible transparency, not only with regard to the scheme originally submitted but with regard to variations and modifications.
If the Government are minded to turn down these amendments, they would do well to recall the bitter experience of the milk marketing board in respect of its consultation on the milk requirements of the processors. The consultation did not work. It was wrong. It did not operate correctly—a fact that the Minister should bear in mind when responding. On that occasion the voice of the industry was unanimous in crying, "Stop the bullying." That was the industry's response to the way in which the milk marketing board conducted its affairs. The then Secretary of State had to intervene and almost instruct the board to withdraw the document that it had sent out, which had clearly upset so many of the processors. Of course, the milk marketing board responded.
Many of these matters could be dealt with if the proper consultation procedures were put in place. We have the support of the Dairy Trade Federation and the Food and Drink Federation for the amendments. Those organisations feel strongly about these matters, and the Government should respond sympathetically.

Mr. Jack: The hon. Member for Workington (Mr. Campbell-Savours) is right to raise the very important subject of consultation. In the short time that I have been in the Ministry of Agriculture, Fisheries and Food it must be one of the most-consulted Government Departments. Hardly a day goes by without someone writing to us about something. It is not as if we live in a secret world in which things happen and decisions are taken without probing. The very fact that we are debating these matters today is a further example of the type of probing that can take place in respect of an exercise like this. If, at the end of the day, people are concerned about what the board proposes, the House can always be used as a forum for such discussion. The potential role of Parliament should not be ignored.
The amendments seek to define in clear terms various ways in which the consultation process might be carried out. I am concerned about that. I can see no circumstances in which, once the board produces its suggestions, people—whether suppliers or processors—will not come forward and give us their views in no uncertain terms.
With regard to the obligations of the authority and Ministers in respect of these matters, clause 3(2)(b) makes it abundantly clear that the authority to which the application is made shall not grant it except in stated circumstances. The provision goes on to talk about consultation, and makes it very clear indeed that the process must be carried out thoroughly. It also makes clear that, in determining our role in this matter, we have to take into account the interests of consumers and producers of milk. Our obligations could not be clearer.

Mr. Campbell-Savours: Why does the provision preclude detail?

Mr. Jack: I imagine that the hon. Gentleman, because of his political persuasion, has never made an application—perhaps I do him a disservice, so I shall speak very quietly—for shares in a company. [ Interruption.] We have discovered a new truth about the hon. Gentleman. I do not want to cast aspersions. Opposition Members have cast enough of them in the past 24 hours. I say to the hon. Gentleman as an honourable man, that if his eye had lighted on the prospectuses for the sale of shares in many companies that have sought to raise extra capital in the market, or have made a new issue, he would have seen the amount of detail that is necessary to satisfy even the most sophisticated of investors. Every single detail would not be provided, despite what the amendment proposed. If the amendment were accepted every lease, terms of property and every other single fact would have to be accumulated in some vast volume. A pantechnicon with that volume would arrive at the home of every consultee and a forklift truck would be needed to carry it in.
I do not believe that that is what the hon. Member for Workington had in mind. I believe that he wants sufficient detail and information to he given so that people can make informed choices. We. shall look carefully at the propositions that are presented to us for the means to provide such information.
I do not want the hon. Gentleman to think, however, that our decision-making process will be clothed in total secrecy. Once we have looked at the boards' proposals, we will produce our description of them. We will include such detail as we consider necessary to enable consultees to comment on the matters that will affect them. We will exclude, quite properly, commercially sensitive information and details that are irrelevant to the judgment of the proposals on, for example, lists of property.
The hon. Gentleman, with his commercial experience, will appreciate the type of questions that people who are interested in the proposals will want to raise. If I were a supplier of milk, I would want to know the terms upon which my business would be conducted. I should like to know what I was expected to do. I should also like to know what Milk Marque was expected to do and when I would be paid. I should like to know how my milk would be paid for, when it would be collected and under what terms of the contract. Those are the things that matter to farmers. I do not believe that they would be wildly concerned as to whether the office typewriter is leased, bought or whatever.

Mr. Campbell-Savours: What about the boards' other assets?

Mr. Jack: I shall come to them in a moment, but they will want Co know about the terms under which their members may acquire their milk.
I appreciate that the document that was sent out by the Milk Marque did not get a warm and friendly press. I can understand why. The hon. Member for Workington is assiduous in his preparation, however, and if he delves into that document he will find that it contains some warm and friendly phrases. It talks about wanting to develop partnerships and offer service. That is the language that producers understand. The document also provides a variety of specimen types of contract. Those are the details for which those who are seeking supplies of milk will look. I feel certain the propositions from the boards will reflect on those issues.
The central issue is found in clause 3, which puts a clear responsibility on Ministers to ensure that the right detail is considered. We want to be able to paint our pictures. I am sure that the hon. Member for Workington will want to put his own questions and we may want to ask some in our consultation document. That important safeguard will ensure that people can give us their views.
7.15 pm
Someone may say that he would have liked to have seen more detail on a certain point. Such a sensible question is what proper consultation is all about. As the hon. Gentleman will be aware, all the various interested bodies will certainly not be backward in coming forward with their propositions concerning the proposed major change.
I have considered the Opposition amendments and I cannot recommend my right hon. and hon. Friends to support them.

Mr. Campbell-Savours: How sad.

Mr. Jack: It is a great sadness because some of them are drafted in such a way that they would not work.

Mr. Campbell-Savours: Perhaps that was the reason for them.

Mr. Jack: The hon. Gentleman has admitted that he has drafted amendments that do not work, but he invites


the House to support them. They are the product of the "Don't work" party. For that reason, I need not detain the House with a detailed examination of them.

Amendment negatived.

Mr. Jack: I beg to move amendment No. 10, in page 3, line 44, leave out 'milk production' and insert 'the occurrence'.

Madam Deputy Speaker: With this it will be convenient to discuss also Government amendments Nos. 11 and 12.

Mr. Jack: The amendments, unlike those tabled by the Opposition, work and make a small technical correction to clause 3(5). which deals with the possible basis for the distribution of hoard assets to producers. The present reference to milk production is fine in so far as it could refer to a person who is registered as a producer on a specified day or within a specified period.
If a board wanted to base its distribution of assets on a producer's litreage of milk or the value of it, it would refer to milk produced and marketed. Some milk is produced and not marketed, however; for example, if it is fed to calves on farms. The new wording makes the necessary distinction.

Amendment agreed to.

Amendments made: No. 11 in page 3, line 45, after 'year)', insert 'of any relevant matter'.

No. 12, in page 3, line 48, at end insert—

'(6) For the purposes of subsection (5) above, the following are relevant matters—
(a) the production of milk, and
(b) the sale of milk by the person responsible for producing it.

(7) For the purposes of subsection (6)(b) above, milk shall be treated as sold if it is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.'.—[Mr. Jack.]

Schedule 1

QUALIFYING SCHEME. OF REORGANISATION

Mr. Jack: I beg to move amendment No. 13, in page 33, line 19, at end insert—

'(3) Where information specified under sub-paragraph (1) above identifies a person as a purchaser of milk from the board, the scheme must provide for the information to be disclosed only with his written consent.'.

Mr. Jack: The Bill covers the possibility that a reorganisation scheme might contain provision for a board to pass information to a successor organisation. I do not envisage that Ministers would approve the passing of commercially sensitive information to a trading successor body. I am, however, aware of the concern of the dairy trade that the safeguards in this respect should be as watertight as possible. The amendment responds to its concern by making it necessary for a board to obtain a purchaser's written consent in the relevant circumstances.

Amendment agreed to.

Clause 7

INFORMATION

Mr. Jack: I beg to move amendment No. 14, in page 6, line 41, leave out '21' and insert '14'.

Madam Deputy Speaker: With this, it will be convenient to discuss Government amendment No. 15.

Mr. Jack: The Government were subjected to strong words—perhaps "attack" is too forceful a word—in Committee about their failure to listen and to take into account some of the interesting ideas that the Opposition put forward. We did listen, however, because the amendments respond to an interesting, sensible proposition from the Opposition.
Clause 7 would enable Ministers to require any person to supply them with the information that they need to decide whether to approve a milk marketing board reorganisation scheme or any application from a board for a variation or withdrawal of its scheme. It provides that if Ministers require information from the milk marketing board to which the reorganisation scheme relates and the board fails to provide that information, its application is treated as having been withdrawn.
The Bill currently gives a board 21 days to show that any failure to supply information was accidental. In Committee the Government agreed to consider a reduction in that limit to 14 days. We accepted that suggestion, hence the amendment. Amendment No. 15 introduces a parallel change for the potato marketing board.
I thank Opposition Members for their suggestion and I am delighted that I have been able to move the amendment.

Mr. Campbell-Savours: I dreamt that one up in the bath.

Amendment agreed to.

Schedule 2

PROVISIONS RELATING TO CARRYING OUT OF APPROVED SCHEME OF REORGANISATION

Mr. Jack: I beg to move amendment No. 16, in page 35, line 13, leave out 'for no' and insert 'without any'.

Madam Deputy Speaker: With this it will be convenient to discuss also Government amendments Nos. 17, 28 to 41, 18, 19, 42, and 20 to 27.

Mr. Jack: The amendments make technical, drafting adjustments to the provision specifying the treatment for tax purposes of transfers made under an approved reorganisation scheme.

Amendment agreed to.

Amendments made: No. 17, in page 35, line 13, after 'consideration', insert
'being provided by the persons acquiring them'.

No 28, in page 35, line 18, at end insert—

'3A.—(1) Where—
(a) in accordance with an approved scheme, shares in a subsidiary of the relevant board ("the transferred company") are transferred otherwise than under section 10 above to a qualifying body ("the successor"),
(b) immediately after the transfer, the successor is a member of a group of which the relevant board is a member, and
(c) the scheme provides as mentioned in paragraph 3(1)(b) above,

sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 shall not apply on the transferred company ceasing to be


a member of a group of which the relevant board is a member if, immediately after doing so, it is a member of a group of which the successor is a member.

(2) Where by virtue of sub-paragraph (1) above sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 do not apply, then, on the transferred company ceasing to be a member of a group of which the successor is a member, those sections shall apply—
(a) as if any assets acquired by the transferred company, at any time when it was a member of a group of which the relevant board was a member, from any member of that group had been acquired by it at that time from the successor, and
(b) as if the transferred company and the successor had at all material times been associated companies for the purposes of those sections.

(3) In this paragraph—
group" has the meaning given by section 170 of the Taxation of Chargeable Gains Act 1992; and
relevant board" means the board to which the scheme relates.'.

No. 29, in page 42, line 39, at end insert—

'( )where the trustees acquire the shares or securities on a disposal, the person making the disposal shall be treated as if the consideration for the disposal were of such amount as would secure that on the disposal neither a gain nor a loss accrues to him,'.

No. 30, in page 43, line 34, leave out 'share is' and insert 'shares are'.

No. 31, in page 43, line 37, after 'him,' insert—
'(aa) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers:.

No. 32, in page 43, line 46, leave out 'share' and insert'shares'.

No. 33, in page 43, line 47, leave out 'it' and insert 'they'.

No. 34, in page 43, line 49, leave out 'share' and insert 'shares'.

No. 35, in page 44, line 1, leave out 'share' and insert 'shares'.

No. 36, in page 44, line 2, leave out 'it' and insert 'they'.

No. 37, in page 44, line 7, leave out 'a share' and insert 'any shares'.

No. 38, in page 44, line 8, leave out 'share is' and insert 'shares are'.

No. 39. in page 44, line 18, leave out 'debenture' and insert '(a)'.

No. 40, in page 44, line 19, after 'board,', insert 'and

(b) is either—
(i) issued'.

No. 41, in page 44, line 21, at end insert

', or
(ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.'.

No. 18, in page 45, line 2, leave out 'for no' and insert 'without any'.

No. 19, in page 45, line 2, after 'consideration', insert 'being provided by the person acquiring them'.

No. 42, in page 45, line 32, at end insert—

'(3A) For the purposes of sub-paragraph (3)(b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule Ito this Act, have provided for the property concerned to be transferred to him.'.

No. 20, in page 46, line 33, leave out from 'company' to 'to'

No. 21, in page 46, line 34, after 'class' insert
'without any consideration, or with only a nominal consideration, being provided by the members acquiring them'.

No. 22, in page 47, line 2, leave out 'for no' and insert 'without any'.

No. 23, in page 47, line 2, after 'or'. insert 'with only'.

No. 24, in page 47, line 2, at end insert
'being provided by the members acquiring them,'.

No. 25, in page 47, line 36, leave out 'for no' and insert 'without any'.

No. 26, in page 47, line 36, after second 'or', insert 'with only'.

No. 27, in page 47, line 37, after 'consideration,', insert 'being provided by the persons acquiring them,'.—[Mr. Jack.]

Mr. Paddy Tipping: I beg to move amendment No. 85, in page 49, line 19, at end insert—

'(4) If as a result of a deficit in the funding of the pension scheme, the scheme is unable to meet its obligations to any or all of its members, the substitute principal employer or its successor shall have the power and be under a duty to require eligible milk producers to make contributions for the purpose of making good the deficit.

(5) The appropriate authority shall create a residuary body to the milk marketing board which shall exercise the power and be subject to the duty mentioned in subsection (4) above, if—
(a) the substitute principal employer or its successor at any time ceases business without there being a further successor, or
(b) the appropriate authority considers it otherwise desirable to create such a body.'.

The purpose of the amendment is straightforward. It seeks to protect the interests of present and future pensioners of the milk marketing scheme, who represent quite a large group—8,600 contributors and 5,500 pensioners, of whom, I understand, 1,000 are widows. I understand that the fund has assets of £300 million.

Pensioners of the fund are rightly concerned about its future. Quite simply, it is their future that we are debating. They have contributed to the fund and they want to be consulted on the way forward. They feel that there has been a lack of consultation and that so far their views have been rebutted. With the high profile of pension issues in the news, they are concerned. It is clear that, in any scheme of reorganisation, real changes must he made. Change is often worrying and past and present pensioners are clearly anxious about the future.

A number of issues can be identified. What is the present position of the pension fund'? Can it meet its liabilities? Is it in surplus or in deficit? Should there be a surplus—I understand that there is supposed to be one—how will it be dealt with? There is a strong case to be made that any surplus should he applied only to the beneficiaries of the scheme, since they have contributed to the scheme and built the foundations of the company. They believe that any surpluses should be applied to them rather than to funding reorganisation. They want the milk marketing scheme and successor bodies to give commitments in line with those that currently exist—such as a commitment that index-linked pensions will be continued.

The amendment addresses the issue of a possible deficit. The successor bodies must take responsibility for any deficits. The key issue is how pensioners will he split


among the successor pension schemes. The existing pension scheme may be split two ways—into a new Milk Marque scheme and a new Dairy Crest scheme.

Views differ quite markedly among pensioners about which might be the most profitable successor company. Both companies face major challenges. It is unclear how pensioners will be allocated to successor pension schemes. Will they have a choice, or will they, for example, simply be allocated to one scheme or another?

Pension matters are a live issue for the Government at the moment. I understand that the Department of Social Security promised to offer advice on how such pensioners might be dealt with. Its advice has been long promised, but slow in coming. I know that this is not a responsibility of Agriculture Ministers, but I look for a commitment from them that they will pursue this matter and try to facilitate the provision of advice that is needed to take the discussion forward.

Amendment No. 85 seeks to provide a safety net. It allocates responsibility for underwriting pension schemes. Pensioners want Dairy Crest and Milk Marque to do well. They have worked hard to build the foundations of the milk marketing board and want the successor companies to succeed. Having built the foundations, they do not want the roof—their pensions—to collapse over their head. The amendment would effectively secure their future.

Mr. Tyler: I simply want to endorse the general comments of the hon. Member for Sherwood (Mr. Tipping). The hon. Gentleman and I and others on both sides of the Committee wanted to ensure that the interests of pensioners were not adversely affected by these changes.
In Committee, the point was made many times—it would be wrong not to repeat it tonight—that the milk marketing board has given good service to this country, to producers and to everybody else in the industry. It would clearly be unacceptable for servants of the milk marketing board not to be treated so well in the future as a result of changes to the viability of the pension scheme.
The hon. Member for Sherwood made some general points, but his specific point about the way in which the successor pension schemes will operate is one on which, I hope, the Minister will be able to give us further reassurances, following those given by his predecessor in Committee.
It was clear, I think to all members of the Committee, that this important issue was causing much concern and anxiety among many people. I hope that the Minister will reiterate the assurance that was given in Committee that pensioners will not be forgotten.

Dr. Strang: I am glad to have the opportunity to support my hon. Friend the Member for Sherwood (Mr. Tipping). I am sure that the whole House will recognise that we have a responsibility to ensure that the interests of pensioners and future pensioners are properly safeguarded.
The changes are being initiated by the Government. They have decided that the boards should not continue and that, as a result, Milk Marque and Dairy Crest will operate independently. The Government have a responsibility to be rather more forthcoming than they have been to date about their determination to ensure that staff are not disadvantaged as a result of the Bill. That is the least

to which the staff are entitled. My hon. Friend the Member for Sherwood put the case admirably. I hope the Minister will now take the opportunity to respond positively.

Mr. Jack: I am most grateful for the considered and careful way in which Opposition Members have introduced this subject. I can well understand its sensitivity. At a time of any change, those who are nearing retirement want to know that their future sources of income have a degree of security.
The problem with amendment No. 85 is that it casts the role of the Government as one of last resort in creating a mechanism by which deficits of the successor pension operations could be made good. If the hon. Member for Sherwood (Mr. Tipping) studies what is about to happen, he will understand that the Government are not unwilling to acknowledge the importance of the issue to current and future pensioners. However, it is not proper for the Government to accept the responsibility that he offers us.
The Government accept a responsibility to pensioners under the operation of pension law. He will be aware that the Goode committee is looking into the matter. His remarks alluded to just that. There is already a complex and well-tried set of laws dealing with the responsibility of pension trustees to safeguard the interests of pensioners.

Mrs. Peacock: Will my hon. Friend give way?

Mr. Jack: I shall conclude this point first.
I acknowledge that there have been cases in the past where the conditions of trust have not always been fulfilled, but by and large those who have operated the pension funds for large and small companies in Britain have carried out their duties with absolute probity and correctness, recognising their liabilities in law if they so fail. Those people will be responsible for the transference and the future of the pension funds, and I shall turn to that matter when I have given way to my hon. Friend.

Mrs. Peacock: My hon. Friend is quite right to say that the majority of pension funds carry out their duty very well indeed. However, there are pensioners of the milk marketing board who, having listened to what has happened to pension funds recently, are worried that they may be in a difficult position. They will be listening carefully for my hon. Friend's reassurance. Although this is not a matter for his Department, it is considered very much part of the Bill.

Mr. Jack: Let us explore this matter with care; it needs to be handled sympathetically and carefully. I shall do my best to paint a picture that will be at least of some satisfaction to hon. Members. My first task in addressing the problem was to find out whether any assurances had already been given to pensioners.
I have in front of me a copy of a letter dated April from Mr. R. S. Steven, chairman of the milk marketing board, to pensioners saying that he wrote on 29 January
on the subject of your pension".
As it is a short letter, perhaps it is worth looking at the text. It is the first important strand of the views of those who will be responsible for taking decisions. The letter says:
As work on the reform has progressed, we have had a pensions working group consisting of senior Milk Marketing Board and Dairy Crest management, a pensioner who is also a trustee and our actuaries and legal advisers actively considering this matter with the following objectives: meeting current members' reasonable expectations and allaying


pensioners' concerns; ensuring reasonable security measured by strength of funding, providing for similar contribution rates between Milk Marque and Dairy Crest at least in the short term; enabling the trustees of all funds to follow a flexible, balanced investment strategy and avoiding the need as far as practical for the proliferation of pension arrangements".
The letter continues:
We intend to make progress in time for the next trustees' meeting on 18 May".
I find that helpful as a statement of intent to address those issues.
What does the board promise for the future? The letter might be deemed to be a statement of good intent, but is it backed by anything else? The milk marketing board and the Dairy Crest board have agreed to proposals for changes in the arrangements to be put to a meeting of the pension scheme trustees on 1 July. My hon. Friend the Member for Batley and Spen (Mrs. Peacock) will be pleased to know that the trustees will then give scheme members an opportunity to comment before they take a final decision, probably at the end of August. That is important because it means that members will have an opportunity to comment on what is proposed.
The hon. Member for Sherwood rightly asked about the state of the fund. At the back of his mind is the thought that perhaps those with an acute financial approach might see the pension fund as an opportunity for rich pickings. An actuarial valuation of the English and Wales MMB group fund at 31 March 1993 is being finalised and I understand that it is likely to show a small surplus of about 5 per cent. on an ongoing basis and no surplus, using assumptions prescribed by the Government Actuary for the purposes required by the Inland Revenue for checking surpluses in the scheme. The most recent actuarial valuation on the so-called "Board C" scheme has received a small surplus on a winding-up basis and a small deficit on an ongoing basic.
I am informed by those who understand the technicalities that there is also a small surplus in the part-timers' fund. The Scottish boards have advised us that it is almost certain that there will be no surplus in their pension plan. That shows that the principal schemes have been looked at and are in appropriate and satisfactory order. If we couple that with the fact that proposals will he put to pensioners and the letter that Mr. Steven sent out, it is clear that there is great concern about this matter.
It is also important to consider the wider perspective. As I have mentioned, pension schemes and their trustees are subject to the principles of trust law. To pick up on the point raised by my hon. Friend the Member for Batley and Spen. that is most important because the trustees have a duty to safeguard the interests of all scheme members. That position of trust will clearly determine future propositions.
The Occupational Pensions Board also has a role to play, so we have another monitoring body. The OPB has an ongoing role to ensure that the schemes continue to have sufficient funds to meet their liability to pay guaranteed minimum pensions broadly equivalent to the state earnings-related pension scheme; in other words, no one can enter opted-out funds unless those funds can do the job that they are supposed to do. The Occupational Pensions Board is asking whether the funds can. Clearly, that will be a function of the successor pension

organisations. In other words, they will have to be properly funded in the first place to enable those jobs to be done. I find that reassuring.
The OPB will continue to have a supervisory role in future. It will require a certificate from the schemes' actuary every three years and an annual statement from the schemes' administration. If documentation is not up to scratch, there can be problems in terms of cancelling the schemes' contracting-out certificates. Therefore, we have continuing monitoring to ensure that the schemes will have sufficient funding to do the job that the hon. Member for Sherwood wanted them to do.
Under present law, no pension scheme member may be transferred to another scheme without his consent unless an actuary certifies that the value of his rights and benefits will be maintained. In other words, there will be a further check, and no shanghaiing. There will be no transfer there unless the actuary says that the new scheme will do the same job.
The operation of pension law, the position of the trustees, the open and full disclosure of plans and the letter that Mr. Steven wrote show that the people who decide who will be on the MMB and how the Milk Marque and Dairy Crest pension run will take all that into account. Bearing in mind, too, that the existing members of the board will be involved in Milk Marque, I do not think that there will be any intention to put forward a scheme that will significantly disadvantage, upset or worry people.
Everything I have said paints a picture of reassurance in ensuring that the position of pensioners will be maintained as they would want: their pensions will be paid in accordance with expectations, particularly those that Mr. Steven outlined in his letter.

Mr. Tipping: I thank the Minister for the way in which he has pursued the matter. I know that he will look at it again when the scheme of reorganisation comes before him and his colleagues. With permission, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Jack: I beg to move amendment No. 69, in page 50, line 34, leave out from 'which' to first 'or in line 35 and insert:
'imposes a prohibition (whether absolute or qualified) on the transfer'.

Madam Deputy Speaker: With this it will be convenient to discuss also Government amendments Nos. 62, 70, 71, 56, 57, 63, 72, 73, 58, 64, 74 to 76, 59, 65, 54, 51, 55, 52, 53, 77, 66, 78, 79, 60, 67, 80 to 82, 61 and 68.

Mr. Jack: The amendments are intended to complete and, in some cases, correct the provisions of schedules 2 and 4 that deal with the transfer of the property of the milk and potato marketing boards. The broad purpose is to ensure that third-party rights cannot be exercised in such a way as to disrupt or hold up the implementation of a reorganisation scheme—for example, where a lease gives a lessor the right to repossess a property. When a lessee wishes to assign a lease, the Bill will prevent that right from being exercised in the case of a board transferring a lease to its successor. The right would be exercisable only when the successor body wished to assign the lease. Where third-party rights are overridden by provision of that sort, resulting in a material reduction of the third party's interest in the property, the board of the successor body


will be liable to pay compensation. That is only an example, but it illustrates the principle that underlies all the property provisions.
Amendment No. 55 does not fall into that category, and it would be discourteous of me not to draw attention to it. It is intended to ensure that, if a flotation is proposed as part of a reorganisation scheme, it will not be jeopardised by a potential claim by former producers to the title of shares in the company. Leaving open even the possibility of such a claim, which would have to be publicly disclosed, could be more than enough to stop the flotation from going ahead.
The amendment removes a potentially serious source of delay from the reorganisation timetable. The Government consider that the sort of claim with which the amendment is intended to deal would have no more than a remote chance of succeeding; action is no less necessary for that, however. The amendment deals with the matter in a manner that does not prejudice the right of potential claimants to challenge approval of a reorganisation scheme, or their right to compensation if their arguments are eventually upheld. If a court found that, for example, a former producer who had not received shares in a company had a valid claim, that producer would be entitled to financial compensation and his claim would be directed against the residuary body.

Amendment agreed to.

Amendments made: No. 62, in page 50, line 42, leave out 'penalises' and insert 'has the effect of penalising'.

No. 70, in page 50, line 43, leave out
`, or a transfer without consent,'.

No. 71, in page 50, line 44, leave out from 'which' to first 'of in line 45 and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.

No. 56, in page 50, line 46, leave out 'if and insert 'unless'.

No. 57, in page 50, line 46, leave out 'private' and insert 'public'.

No. 63, in page 51, line 5, leave out 'penalises' and insert 'has the effect of penalising'.

No. 72, in page 51, line 6, leave out
or a transfer without consent,'.

No. 73, in page 51, line 7, leave out 'prohibits the effecting without consent' and insert
'imposes a qualified prohibition on the effecting'.

No. 58, in page 51, line 12, leave out 'private' and insert 'purposes other than public'.

No. 64, in page 51, line 19, leave out 'penalises' and insert 'has the effect of penalising'.

No. 74, in page 51, line 20, leave out 'without consent'. No. 75, in page 51, line 40, leave out 'prohibits' and insert 'imposes an absolute prohibition on'.

No. 76, in page 51, line 43, leave out paragraph (b).

No. 59, in page 51, line 44, leave out 'private' and insert 'purposes other than public.

No. 65, in page 52, line 29, leave out 'penalises' and insert 'has the effect of penalising'.

No. 54, in page 52, line 47, at end insert—

'Restrictions on change of location

43A.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—
(a) it is contained in a qualifying agreement,
(b) it imposes an absolute or qualified prohibition on the movement outside a specified area of property to which the agreement relates, and

(c) the prohibition which it imposes is imposed for purposes other than public purposes.

(2) For the purposes of sub-paragraph (1) above, an agreement is a qualifying agreement if—
(a) it is an agreement under which moveable property is leased to a milk marketing board or to a subsidiary of such a board, and
(b) an approved scheme makes provision for the transfer of rights and liabilities of the lessee under the agreement.

(3) Where an approved scheme—
(a) identifies a qualifying provision as one to which this paragraph applies,
(b) specifies a relevant modification in relation to that provision,
(c) specifies a commencement date in relation to the modification, and
(d) specifies one of the relevant bodies as the body against which any claim under paragraph 43B below, in relation to that provision, is to be made,

then, subject to any provision of regulations under sub-paragraph (4)(c) below, that provision shall have effect subject to the specified modification on and after the commencement date specified in relation to it.

(4) The appropriate authority may make regulations—
(a) with respect to the giving of notice of a provision of an approved scheme which does any of the things mentioned in paragraphs (a) to (c) of sub-paragraph (3) above,
(b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
(c) excluding sub-paragraph (3) above where no certificate of compliance under paragraph (b) above has been given before such date as may be specified in the regulations.

(5) Where by virtue of sub-paragraph (3) above a qualifying provision is modified in its application to any property, the fact that, at any time in the week beginning with the date on which the modification first has effect, that property is outside the permitted area shall not be treated as constituting a breach of the provision if the property—
(a) is in the area which was the permitted area before the modification had effect, or
(b) is in transit from that area to the permitted area.

(6) In sub-paragraph (3)(b) above, "relevant modification", in relation to a qualifying provision, means a change, in relation to any of the property to which the provision applies, in the area by reference to which the qualifying provision has effect.

(7) In sub-paragraph (3)(d) above, the reference to the relevant bodies is to—
(a) the milk marketing board to which the scheme relates, and
(b) the body or bodies to which property, rights or liabilities of that board are, under the scheme, to be transferred under section 10 above.

(8) In sub-paragraph (4) above, "appropriate authority" means—
(a) in the case of an approved scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
(b) in any other case, the Secretary of State.

(9) For the purposes of this paragraph, any provision which has the effect of penalising the movement of property outside a specified area shall be treated as prohibiting it.

43B. Paragraph 43 above shall apply in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 43A above as it applies in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 42 above.'.

No. 51, in page 52, line 47, at end insert—

43C.—(1) Where an approved scheme provides for rights and liabilities of a lessee under a qualifying agreement to be transferred to a company on a day earlier than the vesting day under the scheme, the provision shall have effect by virtue of this paragraph if, immediately before the day of the transfer, the company is a qualifying transferee.

(2) In sub-paragraph (1) above, "qualifying agreement" means an agreement under which moveable property is leased to the board to which the scheme relates or to a subsidiary of that board.

(3) For the purposes of sub-paragraph (1) above, a company is a qualifying transferee if it is—

(a) a company in relation to which the scheme provides for the taking of steps with a view to securing its quotation on the Stock Exchange,
(b) a subsidiary of a company falling within paragraph (a) above, or
(c) a company which, if the scheme is carried out, will become a subsidiary of a company falling within paragraph (a) above before that company is quoted on the Stock Exchange.'.

No. 55, in page 52, line 47, at end insert—

'43D.—(1) Where—
(a) an approved scheme provides for the taking of steps with a view to securing the quotation of a company on the Stock Exchange, and
(b) the board to which the scheme relates makes under the scheme a qualifying transfer of shares in a subsidiary of its,

then, if the shares transferred were subject in the hands of that board to a resulting or constructive trust, they shall by virtue of the transfer cease to be subject to that trust.

(2) For the purposes of sub-paragraph (1) above, a transfer is a qualifying transfer if—
(a) it takes place in connection with the carrying out of the provision mentioned in paragraph (a) of that sub-paragraph, or
(b) the transferee is a qualifying person and the shares transferred arc of the same class as other shares in the subsidiary which fall to be transferred as mentioned in that paragraph.

(3) For the purposes of sub-paragraph (2) above, the transferee is a qualifying person if the shares are transferred to him—
(a) by virtue of his being, or having been, a registered producer, or
(b) as trustee for persons who are entitled to participate in the trust by virtue of their being, or having been, registered producers.

(4) For the purposes of this paragraph, shares of a company shall not be treated as of the same class unless they are so treated by the practice of the Stock Exchange or would be so treated if dealt with on the Stock Exchange.'.

No. 52, in page 56, line 9, after 'above', insert 'or paragraph 43C above'.

No. 53, in page 56, line 11, leave out 'vesting day' and insert 'day of the transfer'.—[Mr. Jack.]

New clause 17

PUBLICITY FOR DETERMINATIONS (No. I)

'. As soon as reasonably practicable after granting an application under section 25 or 28 above, the Ministers shall make public in such manner as they think fit—
(a) the fact that they have granted the application, and
(b) the principles of the approved scheme or, as the case may be, of the approved variation.'.—[Mr. Jack.]

Brought up, read the First and Second time, and added to the Bill.

New clause 14

FUNCTIONS UNDER SECTION 19 OF THE AGRICULTURAL MARKETING ACT 1958

'. The functions of a committee appointed under section 19 of the Agricultural Marketing Act 1958 (consumers' committees and committees of investigation) shall not include the consideration of anything done by the Board in connection with an application under this Part of this Act or the carrying out of an approved scheme.'.—[Mr. Jack.]

Brought up, read the First and Second time, and added to the Bill.

New clause 2

RESTRICTION ON REVOCATION OF SCHEME (No. 1)

'—(1) This section applies until a decision has been made by the Council of the European Communities to introduce a regulation on the establishment of a common organisation of the market in potatoes.

(2) The Minister shall not lay before Parliament a draft of an order under section 22 of this Act or paragraph 5 of Schedule 1 to the Agricultural Marketing Act 1958 unless—
(a) a poll of persons who are registered producers has been carried out for the purpose of ascertaining the level of support among them for the making of that order, and
(b) a majority of the votes cast in that poll has been cast in favour of the making of the order.

(3) —(a) The Minister may direct the Board to carry out such a poll as is mentioned in subsection (2) of this section and the Board shall comply with the direction within such time (if any) as may reasonably be specified in the direction.

(b) Such a poll shall be carried out as if it were a poll under section 36(1) of this Act.'—[Mr. Campbell-Savours.]

Brought up, and read the First time.

Mr. Campbell-Savours: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss also the following: new clause 3—Restriction on revocation of scheme ( No. 2):

'.—(1) This section applies until a decision has been made by the Council of the European Communities to introduce a regulation on the establishment of a common organisation of the market in potatoes.

(2) The Ministers shall not make either such an order as is specified in section 22(i) of this Act or an order to revoke the Potato Marketing Scheme in accordance with Schedule I of the Agricultural Marketing Act 1958 until—
(a) a poll of persons who arc registered producers has been carried out for the purpose of ascertaining the level of support among them for the making of either kind of order mentioned above, and
(b) a majority of the votes cast in such a poll has been cast in favour of the making of such an order.

(3) The Ministers may direct the Board to carry out such a poll as is mentioned in subsection (2) of this section and the Board will comply with such a direction within such time (if any) as may reasonably be specified in such direction.

(4) Such a poll as is mentioned in this, section shall be carried out as if it were a poll under section 36(i) of this Act.'.

New clause 4—Restriction on revocation of scheme (No. 3):

'.—(1) This section applies until a decision has been made by the Council of the European Communities to introduce a regulation on the establishment of a common organisation of the market in potatoes.

(2) Before determining that it appears to them that it is necessary or in the public interest that the Potato Marketing Scheme should be brought to an end or that the Scheme should be revoked in accordance with the provisions of Schedule I of the Agricultural Marketing Act 1958, the Ministers shall first cause a poll of registered producers under that Scheme to be carried out for the purpose of ascertaining the level of support among them for bringing the Scheme to an end or revoking it, and shall not make such a determination unless a majority of the votes cast in such a poll is in favour of so doing.

(3) A poll under this section shall be carried out as if it were a poll under section 36(1) of this Act with the substitution in that subsection for "The Board" of "The Ministers".'.

Amendment No. 49, in clause 23, page 13, line 27, at end insert

`(2A) Where subsection (2) above applies, no order shall be made under subsection (1) above unless the Ministers have consulted on a proposal to bring the Potato Marketing Scheme to an end with such persons appearing to them to he representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.

Amendment No. 50, in page 13, line 33, at end insert

`(3A) Where subsection (3) above applies, then to the extent that the regulation of the Council of the European Communities permits member states to make their own arrangements within a common organisation of the market in potatoes, the Ministers shall consult on those matters with such persons appearing to them to be representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.

Mr. Campbell-Savours: I apologise to the hon. Member for East Lindsey (Sir P. Tapsell): he wanted to move the new clause, but I told him that he could not. As he will find out, I had a reason.
I am nonplussed: I do not know what is happening to the future of the potato marketing scheme. However, l am not alone; the industry—both producers and processors—is in the same position. The policy formation of recent weeks appears to have been based on a nod and a wink to journalists, producers and the potato marketing board. Meanwhile, the industry is in turmoil, at a time when large potato surpluses have driven producers all over Europe into bankruptcy, and the board is again under severe pressure as it fulfils its obligations under the scheme.
We have all seen a number of reports suggesting a ministerial shift of position. On 4 June, Farmers Weeklyreported:
Gillian Shephard, the first woman to head Britain's Ministry of Agriculture, is considering a stay of execution of the Potato Marketing Scheme and a blitz on red tape…Mrs. Shephard said reviewing the potato scheme was one of her first priorities.
What is the reality? I must confess that I suspected that these statements were being orchestrated by the Whips as part of an exercise in disinformation to head off a Tory revolt. There is no doubt that there is a potential for such a revolt over this part of the Bill; perhaps Ministers have realised that only recently. Yesterday's events in my office, while not confirming my suspicions, should worry not only me but the industry.
The hon. Member for East Lindsey has tabled two amendments, arid I can almost guarantee that the Government will accept them. Why? Because, sadly, the amendments do almost nothing. They merely ensure that no order can be made to wind up the potato marketing scheme unless Ministers have consulted those involved in

the industry. The two amendments do not restrict the Government's actions in any way; they do not tie the Government's hands.
I suspect that the hon. Member for East Lindsey does not know that the amendments that he tabled were a compromise, and that the amendment that really mattered was never tabled. I know that, because I tabled it yesterday, when I received it in my office. It features on the amendment paper as a starred amendment: that means that we cannot debate it, but we should be debating it. I am not sure whether the hon. Gentleman even saw it, but it would have tied the Government's hands on the future of the potato marketing scheme. It would have done the trick. It states:
The Ministers shall not lay before Parliament a draft of an order under section 22 of this Act or under paragraph 5 of Schedule I to the Agricultural Marketing Act 1958 unless they certify that they are satisfied that no grants, subsidies or measures for stabilisation of the market are available for the benefit of potato producers in other Member States of the European Community which are not equally available for the benefit of potato producers in Great Britain.
What a wonderful amendment. I always believed that the Tories would table it. I waited and waited: every day I went to the Vote Office to look at the latest amendments. I was convinced that it would be tabled yesterday morning, but it never arrived. When I finally saw it, it was exactly the amendment that should have been tabled.
What I find remarkable about the new Minister of Agriculture's attitude is that, when her Department was consulted about the amendment the Government were not prepared to accept it. I say that having unearthed a very interesting speech made in the House on 27 February 1989. It reads:
It is in this atmosphere of change that I would like to plead for the retention of two areas of stability so that we might…qease the process of change for farmers. The two crops involved are sugar and potatoes.
The speaker went on to say:
potatoes…are the second highest value crop in the country, after cereals. They…are of great importance in underpinning agricultural incomes for both large and small farms There can be no doubt that the future of the potato crop is looming large in producers' minds. As my right hon. Friend knows, that is because the future of the Potato Marketing Board is under discussion. As hon. Members will understand, that board is always criticised when it refuses quotas, but I think that its response to the consultative document issued by the Government has been thorough and serious.
I also believe that the consumers in the United Kingdom enjoy a far wider variety of quality potatoes than that enjoyed by their European counterparts. That variety and quality, coupled with good marketing methods, has increased our national consumption of potatoes…In my constituency potatoes are extremely important and growers there—and, I believe, throughout the country—are unanimous in their support for option 3 in the consultative document"—
I do not need to remind the House what option 3 was—
which will retain area and quality control in a self-financing way. I hope that, during the consultation, my right hon. Friend will consider that unanimous response carefully."—[Official Report, 27 February 1989; Vol. 148, c. 99·100.]
Who said that? Was it my hon. Friend the Member for Pembroke (Mr. Ainger)? Was it my hon. Friend the Member for Edinburgh, East (Dr. Strang), or my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley)? No, it was the new Secretary of State. We therefore know that potato producers in the United Kingdom have a supporter in the Cabinet who will fight for them and not compromise. I am sure that the right hon. Lady will want to make that clear tonight. If she was


prepared to make that speech before the general election, why was she not prepared to accept today's starred amendment which was put informally to people in her Department? That is the heart of our case.
New clause 2 seeks to delay the introduction of an order winding up the potato marketing scheme until the European Commission has taken a decision. The starred amendment would have dovetailed with the new clause and greatly strengthened the Government's negotiating position at the Council. Their position would have been strengthened had the right hon. Lady been prepared to accept it.
The new clause would allow an earlier wind-up only if a poll of producers cast their votes by a majority in favour of the termination of the scheme. Why do we want to delay the wind-up? The answer is that the Labour party is not convinced that the Europeans will take a real decision, establishing either a light or heavyweight regime. There is no evidence to suggest that they will. A promised agreement on the back of the annual price fix has collapsed in tatters. We thought that Ministers would come home the other week with a potato agreement. The Council of Ministers itself appears to be riddled with differences of opinion about what is needed.
The history of the proposed Council regulation COM(92)185 has been done to death by a thousand objections. It started in November 1982, when it first went to the Commission, and it is due to return to the Council of Ministers some time in September. It has been rejected by the potato marketing board, the European Parliament, the Committee of Professional Agricultural Organisations, COGECA and the Economic and Social Council.
The only person who appears passionately to support this nonsense is the former Minister of Agriculture, Fisheries and Food—unless the Minister of State wishes to say that he has some residual sympathy for it. Perhaps he will argue for it, or perhaps the right hon. Lady will argue for it if she replies to the debate.
While the Commission promotes the debate, the political realities in. nation states are proving major obstacles. Commission officials may try to enforce a level playing field, but the reality is that farmers and politicians are resisting. Why? The argument is not uniquely about level playing fields; it is about the survival of producers in generally depressed economic conditions.
There is a general recognition that subsidies to potato producers throughout the Community have become entrenched. In Committee, my hon. Friends and I spoke at great length about EC subsidy regimes. Indeed, it is fair to say that our debate in Committee had some influence on more recent debates in another place where many speakers dwelt on whether it was possible to create a level playing field when the House of Lords European Communities Select Committee debated the issue some weeks ago.
In Committee, we were able to identify subsidies in Denmark to promote sales, research, quality control and disease protection, which would have amounted to the equivalent of £6 million in the United Kingdom, taking into account the comparative size of the two industries.
We also identified four schemes in Italy funded by an organisation called ALMA. One scheme paid £74 a tonne to growers, a further £50 to producers of alcohol, subsidies of £9 a tonne to producer organisations, £6 a tonne to

co-ops, subsidies for new potato production and the private storage of potatoes. We are told that, in January last year, the Italians paid £26 million in aid to their producers.
France has its own intervention schemes, paying millions to main crop growers—last year, the sum involved was £13 million, although I have been told that I have grossly underestimated it. The French Government are right now paying their early potato growers almost £1,300 a hectare to destroy 1,000 hectares of potatoes in Brittany. French growers receive low-interest priority loans which would survive any new EC regime, which is not supposed to be based on such subsidies. Of course, the French will still receive their cheap loans, because they have already negotiated them. The French even subsidise regular growers to remain in business.
Spain spends millions on loans for storage at preferential interest rates. It even introduced its own import deposit scheme with delayed payments. The Portuguese provide concessional loans for storage, a £32 a tonne export subsidy, special subsidies for co-operatives and intervention buying. They have set a minimum import price of £75 a tonne. What a wonderful Common Market it is where one can set a minimum import price of £75 a tonne and get away with it. Even so, we still think that such schemes will somehow be abolished when the marvellous level playing field is established. It will not happen.
Holland, the much-cited paragon of potato producing virtue, offers starch subsidies, rent subsidies, loan guarantee funds, concessional export guarantees and a carefully tailored small business welfare payments system. Ireland is this year subsidising its production, as even Luxembourg does too.
The subsidies that we have identified are but the tip of an iceberg. Whatever assurances are given by EC Governments, the subsidies will remain in one form or another. Political realities are such that politicians and local institutions in rural parts of the Community will not allow a volatile European potato industry to collapse in ruins. Only in Britain have politicians been prepared even to consider the prospect of such a disaster.
I have a question for the new Secretary of State. I shall read out an answer given to a friend of hers only this morning in the European Parliament. A copy has just been faxed to my office. The copy reads:
As Commissioner Christophersen said in his reply to Written Question No. 3435/92 by the Honourable Member"—
Mr. Peter Crampton—
the inventory of state aid
which I understand is the document that lists all the subsidies which have been paid in Europe over the years—
was designed to provide information on state aid to the whole agricultural sector. This being the case, where a Member State has granted aid in the potato sector, data relating to such aid is included by the Member State in its contribution to the inventory for the year or years in question. As was also indicated in the reply, Member States do not provide such data with a view to its publication.
Oh yes, the information is not for publication.
However, a copy of the updated information provided for the inventory by each Member State is supplied by the Commission, on a confidential basis, to the other Member States and to the Chairman of the European Parliament's Committee on Agriculture.
So, although we have been told that Ministers do not have the information, they do have it. We should do well to recall what was said in Committee on the subject, yet


here is the Commissioner responsible telling us that Ministers have that confidential information, which I know Members on both sides of the House want to see, because it is the only means of establishing whether a true level playing field exists within the EC.
8 pm
The realities cry out. The scheme cannot work until there is not only a level playing field in Europe, but an agreed system of market support. We cannot leave potato producers naked in a market in which bankruptcy follows high yields. That does not mean public money. The potato marketing scheme has cost very little taxpayers' money over the years. In the context of the wider Community, the level of subsidy paid to potato producers in the United Kingdom is the lowest by far. We run a cheap system in this country. The taxpayers' contribution is low because of the nature of that scheme.
Indeed, it is such a good scheme that I have a letter from the Irish equivalent of the National Farmers Union telling me that there are Ministers in the Irish Government who would like to have a potato marketing scheme, but they are not convinced that they would have the support of their English counterparts. Perhaps if Conservative Members are prepared to jump in to the debate—I shall leave them lots of time—they may influence Ministers. Then Ministers may get some spine and some fire into them to go out and defend our scheme, which has worked so well.
People in Ireland realise that an increasingly heavyweight regime—that is what will develop as countries bottle out on removing subsidies—can be no substitute for a managed market that costs the taxpayer almost nothing. They realise that the only way to avoid spurious national schemes being set up is to set up efficient methods of matching production with expected demand. Why do the Government not commit themselves to retaining the existing scheme, or to introducing a revised scheme, which would be my preferred option?
In Committee. we did not argue for a pure scheme such as the existing arrangement. We accepted the principle of revision, because the 'processors have a real argument—so strong an argument, indeed, that I spent the first few months of my present brief trying to devise another scheme to replace the potato marketing scheme, which would take into account the interests of both processors and producers.
I have to tell the Minister that we nearly did it—[ Interruption.] Oh yes, I am sure the Minister has been fully briefed about that. We nearly got there, but in the end there were a few minor obstacles.
The problem was that we did not have the weight of the officials behind us to bang heads together and make people sort the problems out and devise a new scheme. It was just my researcher and I, and a few colleagues, and it is difficult to operate in such a climate when one is trying to sort out the problems of an industry worth several hundred million pounds, involving 14,000 producers, many of whom—including Mr. Robertson—have some rather curious views.
No one wants a half-baked, unworkable level playing field dreamed up by the Commission. If the Government insist on going down their route, they must tell us what public moneys are available to deal with volatile market

surpluses and gluts. Do they have a secret cash store to fund a glut, in these times of stringent control of public expenditure?
No doubt Ministers will argue that the United Kingdom market enjoys no more stability than those of our European partners. We have heard that argument before, and I am sure we shall hear it again tonight, unless the Secretary of State intends to change tack. However, I remind her that that argument has been convincingly rubbished by the Nottingham report.
In case some of my hon. Friends are not aware of it, I shall tell the House that that report, produced by a noble Lord and a professor at Nottingham university, and called, I believe, "Potatoes—an uncommon regime", challenged the case for closing down the operations of the potato marketing scheme. With the use of tables examining coefficients of yield variability and price variability across the Community, the report proved—conclusively, in my view—that the United Kingdom has high yield variability and low price variability. That was an important finding. The report showed that the scheme was working.

Mr. Jack: Who paid for it?

Mr. Campbell-Savours: Yes, the report was paid for by the potato marketing board. But all the research done for the Minister is carried out by agriculture officials. Why should we treat that as any more objective than the research done at Nottingham university?
When the Secretary of State winds up tonight, she will say, "Treat me as an honest broker. You know my sympathies. Campbell-Savours rattled out that speech at the Dispatch Box three years ago, so you know where I stand." She may have strong views on those matters which she may want to signal to other members of the Cabinet at some future stage, if there is to be a policy reversal.
But one thing worries me about the right hon. Lady: I do not know whether she is unassailable. I do not know how long she will last. She may be the Chancellor of the Exchequer in a few months' time; Chancellors do not seem to last long these days. Is it not possible that the present Minister of State, Department of Employment, or the Parliamentary Under-Secretary of State for Corporate Affairs, or possibly the Chief Secretary to the Treasury or the Secretary of State for Social Security, or some other prominent member of the No Turning Back group will take on responsibility for agriculture? Perhaps the present Minister of State will be moved to another Department and we shall get one of those mad right wingers at the Ministry.

Mr. Julian Brazier: Order.

Mr. Campbell-Savours: The trouble is that, if the Bill reaches the statute book in its present form—

Mr. Brazier: Order.

Mr. Deputy Speaker (Mr. Michael Morris): Order. there is only one occupant of the Chair.

Mr. Campbell-Savours: I am glad that you admonished him, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I admonished hon. Members.

Mr. Campbell-Savours: We want an assurance that is sought by the potato marketing board and the United


Kingdom potato producers. I am conscious that the Secretary of State has constituents, and that there are 300 producers in her constituency. This is a difficult matter for her to handle. I understand that.
However, we want an assurance that if the Government are given the enabling powers in the Bill they will not use them before the next general election—[ Interruption.] Let me explain why. A rebellion is being bought off with two compromise amendments on consultation. Judging by correspondence and conversations that I had with hon. Members when the former Secretary of State was in office, I have no doubt that there was to be a rebellion on the potato marketing board.
Conservative Members were prepared to vote with my hon. Friends, and if a rebellion had been on the cards, we would have put on a three-line Whip to defeat the Government. Conservative Members believed that, as the former Secretary of State intended to motor on with the changes and trigger the enabling Jegislation by introducing regulations, the only way to stop him was to support the Labour rebellion. However, that Conservative rebellion has been bought off.
If it was bought off on the basis of consultation, we want an assurance tonight that, if the Secretary of State is given those powers, the legislation will not trigger the regulations. If the right hon. Lady is no longer in her post tomorrow or the day after—I say this with gentle and deferential respect—her role will be filled by someone else. In those circumstances, hon. Members might well say that we should have blocked the possibility of triggering the regulations when we had the opportunity. If we receive the necessary assurances from the Secretary of State tonight, or even an indication from her, I am sure that my hon. Friends will not force the new clause to a Division.

Sir Peter Tapsell: I shall relate my remarks specifically to amendments Nos. 49 and 50, in my name, which were somewhat contemptuously described by the hon. Member for Workington (Mr. Campbell-Savours). It is always a pleasure to follow the hon. Member in a debate, as he manages to invest every subject with a marvellous frisson of cloak and dagger excitement which might otherwise be lacking. I should perhaps start by assuring him that I did not receive any approach from Saudi Arabia over the tabling of my amendments.
I have to declare an interest in that a considerable number of my constituents grow potatoes and work in the potato industry, and almost all my constituents eat fresh potatoes.
I greatly welcome my right hon. Friend the Secretary of State to her new post. Although we traditionally discuss such amendments in the House in an informal and light-hearted way, my right hon. Friend, who has a long farming background, knows of the importance of the subject under discussion and the deep feelings on it held by potato growers throughout the country. They are fiercely wedded to the potato marketing schemes, the quota and the intervention fund. Unlike anywhere else in Europe, Britain's staple diet has traditionally been potatoes, which have always aroused strong feelings in this country, and even stronger ones in John Bull's other island.
I have known only one other female Minister of Agriculture—delectable Madame Edith Cresson. When feelings among French farmers were running rather

high, Madame Cresson had to be rescued in a smart white helicopter from a group of angry farmers. I am certain that my right hon. Friend, who will be a listening Minister in a listening Government, will not find herself in a similar position in relation to the farmers of England, who practically vote Tory to a man—least, they have until now and will, I hope, at the end of the debate gain renewed faith in and enthusiasm for Toryism. I hope that my right hon. Friend will not be tempted to follow the example of Madame Cresson, notwithstanding the fact that she went on to be, not just Chancellor of the Exchequer, but Prime Minister of France.
There has been some form of potato marketing board in this country since the 1930s, and there have been many changes at various stages over the years in the way that it has been organised. The name "potato marketing board" is misleading to the layman who does not study such matters because the potato marketing board does not sell any potatoes. It would be more appropriate if it were called the potato growers association. If it were, it might attract less criticism from what I might describe as free marketers—ething that I have never been.
8.15 pm
I want to reassure those of my hon. Friends with a passion for completely unlicensed markets that there is a totally free market in potatoes beyond the farm gate, which is not always appreciated. I say that for the particular benefit of my hon. Friend the Member for Wealden (Sir G. Johnson Smith), whose potato farmers constitute a distinguished group in Sussex. The wide support for the present arrangements among potato growers derives from the fact that the arrangements provide a certain stability of price without involving the taxpayer in the cost of intervention buying. Due to our island climate, yields in Britain are more variable than those on the continent, and it is extremely important for our potato growers to be certain about price.
The phrase "the heart of Europe" is often bandied about. Like many such platitudes, it is meaningless as Europe has no heart and never will have. If one were to ask where the allegorical heart might be, one could say that it was the common agricultural policy. One of the ironies of our affairs in the House is that, at a time when many of my right hon. and hon. Friends are keen on closer European union, they are often critical of the common agricultural policy. However, when one goes to continental Europe one finds that the cement that holds the European concept together is the CAP, which is liked by the French and the Germans.
Every country in the world, including the United States and Japan, supports agriculture—tain has done so since the beginning of the 1939 war. It is right that we should do so for an enormous range of reasons. Agriculture is not like industry; it needs support. However, the problem of the CAP has been its excesses. I fully accept that urban taxpayers cannot be expected to sign huge cheques every year to support commodities which nobody wants to buy. But the great merit of the potato marketing scheme is that, unlike the CAP, its mechanism keeps supply and demand in balance to a considerable extent.
Far from abolishing the potato marketing scheme, we should hold it up to the Community as an example of the sort of device that it should consider using for a variety of other commodities. It avoids the excesses of the CAP


financial arrangements, with large imposts falling on the taxpayer. The MacSharry plan was devised to overcome the excesses of the CAP, which cannot be blamed on the potato marketing scheme.
When something works, why fix it? The view of every potato grower in my constituency is that the potato marketing scheme works. They will be very upset if it is abolished.
In the European context, potatoes have been the only major arable crop not to be covered by a CAP regime. Although potatoes have often enjoyed governmental support and grants on the continent, as the hon. Member for Workington said, we are now told that there is to be a CAP regime for potatoes. I do not necessarily agree with the hon. Member for Workington that that is another conspiracy, or that it will never come about.
In preparation for this debate, I read the Commission's report of December 1992 and I even read the Rapporteur's report on the subject to the European Parliament. The Council is considering the scheme and I imagine that it will eventually come to fruition. As the House will know, 11 am not an enormous enthusiast for European arrangements, but if we are to have a regime for potatoes, I hope that it will be sensible and not too light weight.
The declared aim of the Commission's regulation in Brussels in December 1992 was:
To ensure stability of the market in potatoes and a fair income to the producers.
That is perfectly acceptable and that is the aim of the potato marketing scheme. However, as so often with the Brussels Commission, its good intentions may produce quite opposite practical results. As the hon. Member for Workington and many others have suggested, the Commission may propose such a light weight Community regime in potatoes that, far from ensuring
stability of the market…and a fair income to the producers",
it may produce the exact opposite.
However, there is nothing in the British arrangements at present which appears to be contrary to the Commission's proposals, the Rapporteur's report and the European Parliament's response. As subsidiarity is stressed increasingly in European affairs, if the EC produces a potato regime, it would be a very good test of whether subsidiarity has any real meaning if we were allowed to retain the potato marketing scheme that we already have.
Under the British scheme, stability arises from the constancy of acreage planted and the certainty of future acreage which is encouraged by the quota system. In practice, the potato marketing board's buying-in programme is less important than the quota system. However, it also helps to maintain confidence and at no cost to the taxpayer.
We can contrast that with the situation in Brittany today, to which the hon. Member for Workington referred. Very considerable sums of French taxpayers' money—not CAP money—are being spent to help the Brittany potato growers, precisely because they do not have a scheme like ours.
Turning from the European context, I want now to consider the British critics of the scheme. It is fair to say that three main criticisms are most usually advanced within the United Kingdom against the case for the retention of the potato marketing scheme.
The first criticism is that the Tory party is supposed to believe in free markets and the potato marketing scheme restricts that. Secondly, it is said that the housewife is forced to pay a higher price for her potatoes than would otherwise be the case if there was no such scheme. Thirdly, it is said that the processing companies are concentrating their capital investment in continental Europe to the disadvantage of British employment and our balance of payments because of the scheme.
I hope to demolish those three propositions. First, with regard to free markets, I have already said that there is a totally free market in potatoes outside the farm gate. In that regard, I want to refer to the Nottingham report. Nottingham university is in the first constituency that I was elected to represent in 1959. I have a very high regard for Nottingham university, and I was a member of the university council for many years.
The Nottingham report is a distinguished document, which I have read with the greatest care. I believe that it demolishes most of the criticisms against the potato marketing scheme. The report states:
The current system of market intervention is one that works with the market rather than against it.
The abolition of the potato marketing scheme, far from producing a free market in the technical and economic sense of the phrase, might have precisely the opposite effect.
The processors are potentially a monopolistic group of mainly international companies. They take 33 per cent. of the total market in potatoes in this country and 25 per cent. of the home-grown crop. The market in frozen chips is dominated by one processing firm—three firms take 90 per cent. between them and one takes 60 per cent. The market in crisps is dominated by three firms.
If the Government decided to abolish the potato marketing scheme, my farmers assure me that they would be handing over a large and diversified agricultural industry to a small group of international companies which would be able to determine the acreage of potatoes planted and their price. Many farmers have put it to me that there is a much stronger case for referring the processing companies to the Monopolies and Mergers Commission than there is for abolishing the potato marketing scheme.
We do not have as strong a co-operative movement among potato growers in this country as there is on continental Europe. That is another reason for not allowing the oligopolistic tendencies of the processors unfettered expression.
I want now to consider the argument about forcing up the prices to housewives. Fresh potatoes still form three quarters of the market and are, in economic jargon, a price inelastic commodity. The consumption of fresh potatoes in Britain does not change much with price changes at the farm gate, although fresh potato consumption has been steadily rising in the United Kingdom for years unlike the trend in any other European country.
As I said at the beginning of my speech, we are a potato eating people. The potato is our staple diet. We are the only European country of which that is true. The competitors of the potato are pasta and rice, both of which are imported products. In any event, it is the retail chain, not the producer, that mainly determines the price to the housewife.
In the earlier part of this year, farmers in my constituency received about 3p a lb for their potatoes


loose. The housewife pays about 20p a lb for loose potatoes in the shops and about 30p to 40p a lb for packaged potatoes depending on their quality and variety. That shows what a small part the price paid to farmers plays in relation to the price that the housewife pays.
I am assured that farmers receive only about 30 per cent. of the retail price of pre-packaged potatoes, only 10 per cent. of the retail price of frozen chips and only 3 per cent. of the retail price of potato crisps. It is therefore absurd for processors to argue that the British potato grower is in danger of pricing the processor out of the retail market. As I have said, potato consumption does not change much with a change of price at the farm gate, but what do change are the profit margins of the big international processors. That is no doubt the reason why the chairman of the processors wrote to me and a great many other hon. Members a letter that I received this morning in which he strongly urged me to vote for legislation which would abolish the potato marketing scheme.
8.30 pm
Another criticism is that processing is being forced overseas by the potato marketing scheme. That criticism was completely shot down by the Nottingham report. If anybody cares to read the section on processing, he or she will see that one sentence reads:
British potato processors are not adversely affected by the potato marketing scheme.
At great length the report explains the justification for that remark. I will not delay the House by giving all the detail, but I do not see how anybody could read that section of the Nottingham report without being convinced by it.
The continental producer, of course, usually has a much smaller production unit. He uses less expensive capital equipment and, in general, produces potatoes of a lower quality and at a lower price than our potato producers. My farmers feel that the producers want to be able to get their higher quality British potato at a depressed price and to acquire total dominance of the British potato market, although they buy only a quarter of the home-grown crop.
We were told much by the previous Minister of Agriculture, Fisheries and Food about how well the processing investment was going overseas. When one studies the matter overseas, one is immediately informed that the market has approached satiation point in Holland—some companies there are going bankrupt or have already gone bankrupt.
The reason for the adverse trade balance in processed potatoes is that the international processors, having sunk so much capital into continental Europe, are bringing processed potatoes into Britain. Having made that big investment overseas, it is extremely unlikely in the present circumstances that, if we abolish the potato marketing scheme, they will suddenly start to invest more capital in new equipment in this country when there is already overcapacity in Europe.
The import-export argument is often used. Potatoes are a bulk commodity and are too expensive to move in most cases, so the scope for large-scale exports of British fresh potatoes is unlikely to be great. The balance of payments argument, which is the third argument against the potato marketing scheme, does not stand up to analysis.
The employment point is also often advanced against the scheme. Again the arguments point in exactly the

opposite way. There are about 16,000 registered potato farmers, but there are 14,500 active growers at the moment, employing about 60,000 workers. In rural areas, that is extremely important, particularly in Lincolnshire. Despite the large capital investment of big growers in equipment, by modern agricultural standards potato growing is still a relatively labour-intensive industry.
A farmer on a typical 1,300-acre farm in my constituency, with 150 acres of potatoes under the quota, told me last week that he now employs eight full-time workers and that five of those eight would be made redundant if he switched out of potatoes because of the uncertainty which could flow from a destabilised free-for-all regime. That is undoubtedly the case. It is virtually certain that the abolition of the potato marketing scheme would force many small potato growers in particular out of business. The Nottingham report, which was published as recently as April, estimated that 7,000 potato growers—40 per cent. of all potato growers—might go out of business without the potato marketing scheme, at a loss of half a million tonnes of potato production, which would presumably then have to be imported.
With her recent ministerial experience at the Department of Employment, my right hon. Friend the Secretary of State will understand the serious social and employment implications of those statistics, particularly in areas such as my constituency where we have about 14 per cent. unemployment on the coast and where potato growing provides much valuable employment. I suspect that the same is true in many other parts of the country. Whatever Ministers might say to the contrary, every potato grower in my constituency would he most alarmed if the scheme was abolished. They are all convinced that that would lead to much greater price fluctuations and much uncertainty. At a time when CAP regimes are being introduced for sheep, beef and set-aside, it makes no sense at all for the traditional British potato to be the only arable crop enjoying no form of agricultural protection.
I very much hope that my right hon. Friend will feel able to accept the two amendments that I have tabled. [Interruption.] Despite what the hon. Member for Workington says, amendment No. 49 would ensure that she would not use her powers under the legislation to close the schemes without the fullest consultation with everybody connected with the industry. Amendment No. 50 would build into the legislation the fact that, if the Community produced such a light weight potato marketing scheme that it would be virtually useless in stabilising the market, she would again have to consult all interests before using the European initiative as an excuse to abolish the potato marketing scheme. I hope that, as a listening Minister, she will seriously consider accepting my two amendments.

Mr. Tyler: I am delighted to follow the hon. Member for East Lindsey (Sir P. Tapsell) and I echo many of his points, but I hope to do so very briefly rather than repeat them. The hon. Gentleman led neatly to my first question. Given the evidence that he has put before us and the evidence that we have had from many other sources, exactly who is in favour of abolishing the marketing scheme? The answer is the Potato Processors Association—that is all; it is just one potato. When I met a group of Cornish and other south-western potato farmers in Central Lobby just a few hours ago, they said, "There must be some reason for the extraordinary influence of


that comparatively small number of people." The only way in which they could interpret it—I do not cast any aspersions—is chequebook diplomacy, which has been rather notorious in recent days. I suggested that it might be a case of crisp bank notes rather than cheques.
On Second Reading, Conservative Members were critical of plans to abolish the board and the scheme. The right hon. Member for Westmorland and Lonsdale (Mr.Jopling), himself a former Minister, said:
The potato scheme has worked extremely well over the years…I am much disappointed that there is a danger of the potato marketing scheme disappearing."—[Official Report, 23 March 1993; Vol. 221, c. 814.]
The hon. Member for Cambridgeshire, North-East (Mr.Moss) said:
many people, including my potato growers and farmers, may question whether it is worth having any EC regime at all, since it will do so little."—[Official Report, 23 March 1993; Vol. 221 c. 820.]
There is widespread concern right through the industry not—just among processors—and the hon. Member for East Lindsey has rightly reflected that concern this evening.
I stand slightly uncomfortably between the hon. Members for Workington (Mr. Campbell-Savours) and for East Lindsey. The new clauses tabled by the hon. Member for Workington and the amendments tabled by the hon. Member for East Lindsey are both of value. They fit together—indeed, it is critical that they should fit together. My hon. Friends and I endorsed the amendments tabled by the hon. Member for East Lindsey precisely because we hoped that they would be placed before the House—and, if necessary, put to the vote.
There is widespread concern among all producers, be they seed producers, early producers, such as the famous early producers from Cornwall, or main crop producers. Demand is growing. The reason for that, even in the comparatively short period since the completion of the Committee's consideration of the Bill, there has been a major development—the failure of the Council of Agriculture Ministers to make any progress whatever in the development of a regime.
There has been another, perhaps more encouraging, development—the arrival at the Dispatch Box of the new Minister. I draw attention to the second section of the report in Farmers Weekly to which the hon. Member for Workington somewhat peculiarly did not refer:
Mrs. Shephard said reviewing the potato scheme was one of her first priorities
we shall have the benefit of her advice on that tonight.
She would approach the subject with an open mind she promised. She wanted to see the 'lightest possible regime' but intended examining MAFF's plans for the scheme as well as the EC's suggestions for potatoes. As an MP for the mainly arable constituency of Norfolk South West she is well aware of potato producers' objections to the plans to scrap the scheme and the Potato Marketing Board. 'I have heard strong expressions of feelings about it,' she admitted.
That is significant. I hope that her arrival will prove to be the positive development that can be set against the negative developments in Brussels.
Why did the Agriculture Ministers fail to agree? They failed because all the other producer states are enjoying the greatest degree of subsidiarity that they can exploit in the interests of their own producers. We are the only country that seems not to be prepared to do its best by its own producers. Those of the other 11 member states that produce potatoes—I do not know whether Luxembourg, for example, does—are desperately trying to keep in place

the most advantageous schemes that they possibly can to help in what has become an extremely competitive situation. As the hon. Member for East Lindsey rightly said, we should be doing the same. In the absence of an effective regime to help the whole industry throughout the Community we have an obligation to try to make that happen. At present, the imbalance is increasing because the Governments of other member states are doing their best to make sure that it does.
We have heard a number of references to the university of Nottingham report, the title of which has been misquoted. The proper title is "An (Un)Common Potato Regime: the EC and the PM B". I want to read two or three extracts in which the argument not only for the retention of our scheme but for its use as a model for others is put succinctly. The report says:
The record of several European countries in the potato sector demonstrates that potato producers require some form of collaboration or cooperative in order to achieve stable and reasonable incomes through time. The yields and returns from the crop are inherently unstable—much more so than for other arable crops. Certain vegetable crops may have similar problems, but there the Community has adopted intervention and withdrawal as measures to aid producers' incomes in such sectors. For those crops, at least, the Commission has recognised that yield instability, perishability, and difficulties with storage require an element of supply management; albeit after the crop is grown. For potatoes the problem is greater because of the relatively larger area grown and consumed. It is the single largest vegetable item produced and eaten in the Community. Hence, stable supplies and prices are more relevant than ever.
The report continues:
The PMS represents a model for farm policy-makers that deserves consideration and repetition in other sectors.
As the hon. Member for East Lindsey said, rather than disposing of the PMS, we should be replicating it in other parts of the market.
Finally, the report states:
Oligopolistic processing and retailing sectors will tend to exploit growers unless there is some countervailing power available to the production sector. The Potato Marketing Board surely has some role to play in this.
Thus, the conclusion of that excellent report was not just that the potato marketing scheme and the board represent something of which we should be loth to dispose, but that it is peculiarly important to retain them at this juncture.
8.45 pm
At the moment, potato growers are facing the worst of all worlds. One of the Cornish farmers who came to see me this afternoon showed me the figures for his potato crop for 1992–93. The total cost, excluding management time and professional fees, came to £80,000 for about 60 acres. That yield is not remarkable or incredible, but it is not bad either. The income from that crop was £43,200. Such huge losses cannot be repeated year after year without more and more growers being driven out of business. That farmer said that, if the growers have another similar year or if the scheme goes and therefore the fluidity of the prices becomes even more alarming, he will have to make half his staff redundant. It should be remembered that my area is also an area of very high unemployment:
In those circumstances, we shall find that the other member states, which have in place the best support systems that they can devise for this sector of the industry, will carve up the market and we shall be at their mercy. To coin yet another new phrase, it will be the most uneven ploughing field yet.
The Minister is still in her honeymoon period. She has three great advantages. I am sure that other hon. Members from both sides of the House who have farming communities in their constituencies will agree that the right hon. Lady's arrival in Whitehall place has been warmly welcomed for three reasons. First, she has a farming background and it is to be hoped that that will help her to understand the problems of the industry. The speech that was referred to earlier will perhaps give added encouragement to that view. Secondly, the right hon. Lady is known to be a good listener—although whether the hon. Member for East Lindsey is right in thinking that the whole Government are good at listening is perhaps a matter for dispute. Certainly, the right hon. Lady's predecessor did not go round the farming community and achieve such a reputation. Thirdly, and perhaps most important for the farming community, the right hon. Lady is not her predecessor. That is why I hope that she will not automatically adopt her predecessor's views this evening.
Amendments Nos. 49 and 50 are welcome and useful. I hope that the right hon. Lady will think so, too. I hope that the House will either accept them without a Division or, if a Division is called, will vote to add them to the Bill. The Minister must answer the very real concern about the circumstances that have arisen following the failure of the Council of Ministers to develop even a light weight regime—let alone a more effective regime. I hope that, in the hiatus that has followed that meeting, she will be able to reassure the potato producers of this country that they will not be given a potato in a poke—an intolerable state of affairs in which all the producers of all the member states receive better treatment than they do.

Mr. John Greenway: I welcome my right hon. and hon. Friends to their ministerial appointments. Having entered the House with them in the 1987 intake, I am not surprised at the progress of their careers. They will bring a great deal of common sense to the agricultural industry and do a lot of good work for it. While it is a great joy to have a lady Minister of Agriculture, Fisheries and Food, I remind the House that we had a lady Minister of State not long ago—Baroness Trumpington. She took a leading role in the reform of the potato marketing scheme when we previously examined it. I well remember her visiting my constituency and confronting many of my farmers with the bad news that the potato marketing board would disappear. She listened to their arguments and said, "Perhaps we can have another think about it."
I sense that we are in the same situation now because there has been much debate about the future of the potato industry and the scheme. If one thing is clear, it is that no clear consensus has emerged. Despite the welcome fact that the Government have accepted the amendments carried in another place that there should be parliamentary control over the enabling power to revoke the potato marketing scheme, it is right that there should be some greater certainty about the need for more consultation before the scheme is revoked.
The House must be concerned about the wide discrepancy in the view of the growers and processors. As we know, growers see the scheme as providing both stability and the prospect of a reasonable return on their potatoes. If there is no scheme, there will be a potato glut and a fall in incomes, and growers would be forced out of business. Indeed, the threat of the abolition of the scheme has created the current uncertainty among growers,

coupled with the failure of the Commission to make any real progress in the creation of a Community-wide potato regime.
At the other extreme, potato processors such as McCains in Scarborough on the edge of my constituency, which buys from many potato growers in north Yorkshire, say with some force that they want to buy more locally grown potatoes. We must face the fact that, in their view, the scheme prevents them from doing so and does not give the growers enough encouragement to grow the right variety and quality of potatoes for their factories.

Mr. Nick Ainger: Will the hon. Gentleman give way?

Mr. Greenway: I will not take any interventions because we want to wrap up the debate quickly.
The last thing that the House should want is a solution imposed by Ministers. I want the growers and processors to find a common solution. We largely achieved that with regard to the future of the milk industry. Where we are now with the potato industry is where we were two or three years ago with the milk industry. There was a lot of resistance to change and the two sides of the industry failed to reach a common position. As we found that common solution with milk, I believe that we can achieve the same in the potato industry.
I want north Yorkshire and the United Kingdom as a whole to have an expanding potato industry with more United Kingdom-grown potatoes processed in United Kingdom factories with that product sold at home and overseas. The proposed Community-wide scheme is some way off and may not happen, so there is time for the matter to be debated further, although I suspect that we do not have unlimited time.
The present scheme does not protect United Kingdom growers from low-priced imported products and that has undermined the market, certainly in Yorkshire. But there is an opportunity for more discussion and consultation to find a solution. The potato industry needs an agreed solution—that is the best way forward. The industry does not need a political solution or an imposed one. Amendments Nos. 49 and 50, to which I have added my name, provide the mechanism by which we can not only have that further consultation and discussion but provide some greater assurance about the future of potato growers.
Farmers and potato growers in Ryedale and north Yorkshire, and workers in McCains modern processing plant at Cayton, Scarborough, should be on the same side of this matter, not at loggerheads. That is what happened in sugar and it should happen in potatoes. A partnership solution between growers and processors is what the potato industry in the United Kingdom badly needs.

Mr. Ainger: I tried to intervene on the hon. Member for Ryedale (Mr. Greenway) because I wanted to make the point that there is a forum where producers and processors can get together and discuss acreage and types of potatoes to be grown—the Joint Consultative Committee. When one looks at the minutes of the JCC and talks to its members, it is interesting to see that the processors have never demanded a higher acreage or different varieties to be grown. When one reads the minutes of those meetings, it is stretching the imagination to believe what the processors say because they have a forum and an opportunity to address their concerns. It leaves hon.


Members with the belief that the processors are concerned not about growth or the type of potatoes grown but the price of them.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) took us on a nice trip around Europe. At last, we discovered—I hope that it is good news for Ministers—what has been going on in other member states with regard to support and intervention. It is worth while comparing what is currently happening in our potato industry with that of Brittany.
In Central Lobby today, I met local producers from the constituency of the hon. Member for North Cornwall (Mr. Tyler). I was told—I shall use acreage terms—that if an early potato producer in Pembrokeshire could get an income of £1,000 per acre, he would get a reasonable living. We are looking at £800 to cover his costs. In fact, producers now get between £400 and £500, so obviously there is a massive loss.
The potato marketing scheme has been implemented. Total assets of about £2 million—25 per cent.—have been allocated to early growers. However, that will leave them with a significant loss this year, which unfortunately follows a significant loss last year. This year, about 15 per cent. less acreage has been planted and it has been estimated that there will be a further cut of about 30 per cent. as a result of the poor season this year. That is important because the early potato sector has an excellent record of import substitution. In 1987, 385,000 tonnes of new potatoes were imported. That has fallen to approximately 260,000 or 270,000 tonnes now. When we have a balance of payments problem, it seems crazy to allow production of a basic staple food such as potatoes to fall and to encourage imports in.
I return to the comparison that I was making between Pembrokeshire and Brittany. We have a looming crisis. The levy-payers—the producers—will benefit to the massive tune of £500,000. As my hon. Friend the Member for Workington told us, the French Government are intervening directly using French taxpayers' money, not producers' money. The Government have already contributed, according to my figures, more than £1·3 million to their early potato growers. That is the equivalent of about£530 to £560 to each one.
Government intervention is not the only factor in France. The French potato industry has developed powerful co-operatives which in effect set quotas and market the produce directly from the producer. They also supply the seed. They control the acreage in the same way, to a certain extent, as the JCC does.
9 pm
If the Bill is not amended we shall face the prospect in the near future of only British producers being left unprotected in the face of Government intervention and powerful co-operatives establishing quota and acreage, marketing and so on in continental Europe. It is bizarre that the first part of the Bill abolishes the milk marketing boards and encourages the establishment of a powerful co-operative to replace them, yet it sweeps away the potato marketing board and puts nothing in its place.
This is my first opportunity to welcome the Secretary of State to her new post. I urge her to listen to what the producers are saying and what people in rural communities are saying. As the hon. Member for East Lindsey (Sir P. Tapsell) said. the potato industry makes a vital contribution to rural areas in terms of employment

and income. The Secretary of State represents a rural area so she knows that well. It seems ludicrous to leave the Bill unamended. We have heard that it is highly unlikely that we shall get an EC regime. We shall leave our British producers unprotected in a market in which their EC competitors are determined to export to Britain maincrop and early potatoes. I trust that the Secretary of State will have something positive to say in her reply.

Mr. Clifton-Brown: You allowed me to catch your eye, Mr. Deputy Speaker, on the basis that I spoke briefly, which I intend to do. First, I welcome my right hon. Friend and my hon. Friend to their posts. They bring a new look to the industry which I am sure will be welcomed.
I listened to the debate for many weeks in Committee. The hon. Member for Workington (Mr. Campbell-Savours) went on at some length. I thought that I had heard it all. When he announced this evening that he had come up with a better scheme than all the experts had done since the potato marketing board was set up in 1958, and that it almost worked, I nearly fell off my seat. I am sure that the PMB will rush to employ his services as a consultant. But, under the Labour party's new probity, I am sure that he will refuse any consultant's fee.
I declare my interest as a potato grower. Let me bring a little sanity to the debate. In the past 10 years the amount of processed potatoes that we import has doubled from about a quarter of a million tonnes per year to a little more than half a million tonnes a year. On a yield of 20 tonnes per acre that works out to some 30,000 acres. That is 30,000 acres of potatoes that we could be growing in Britain. It amounts to a loss to our balance of trade of £125 million. That is a large sum of money. So there is a good case for looking carefully at our potato market.
It is plain that the potato marketing board has been an outstanding success. The hon. Member for Workington quoted many figures from the Nottingham report which was commissioned by the PMB, so although it may be independent, we cannot expect it to come out glowingly against the PMB.
It is a fact that in the last three of the past 12 years price fluctuations were higher in the United Kingdom than elsewhere and that in any four years price fluctuations were lower here than elsewhere. Therefore, the comment that we have heard so often this evening that the PMB has brought stability into our potato market is simply not borne out. Indeed, in the past season large tonnages of potatoes were changing hands at well below the cost of production, at £30 a tonne or less. The hon. Member for Pembroke, North (Mr. Ainger) has told us that this year many of his early growers are losing money. Last week I heard that an ex-farm price in Pembroke was £41 a tonne whereas at this time of year one would expect the price of potatoes to be £100 a tonne.
The kernel of my remarks is that we are now in a changing market. It will become increasingly easy with technology and better chilling.methods to import not only fresh potatoes but every sort of processed potato, so we must consider our potato market.
I recognise from letters and representations from my constituents that they welcome the PM B/PMS overview of our policy. I have made representations to my right hon. Friend and, indeed, her predecessor to the effect that we should go slowly on abolishing the PMS. It would be folly to abolish the PMS the moment that the Bill is enacted and, as the hon. Member for Workington has rightly


pointed out at length, to suffer the subsidies that would follow. It would be folly to lose the stability that the board brings until we have a regime, however lightweight, across Europe, to which we can oblige our Community partners to adhere under Maastricht.
I welcome the thrust of the Bill, but I urge my right hon. and hon. Friends to think carefully and not to throw the baby out with the bath water. I urge them to go slowly. In that respect I welcome amendment No. 49, which calls for consultations with the industry, but I do not welcome amendment No. 50 because a poll of the industry would produce a difficult result. [Laughter.] Hon. Members who laugh must know that 60 per cent. of the market is produced by just 2,000 of the 16,000 growers. Why, then, should a poll on a per member basis produce the ultimate answer about what should happen to the market?
One needs to consult widely to see the best way forward for potato growers and, above all, for consumers and processors, so that we start to repatriate some of the half a million tonnes produced abroad which should be produced here. I look forward with eagerness to what my right hon. Friend has to say.

Mr. Welsh: I think that the massive impor of frozen chips has more to do with a lack of processing capacity than with the workings of the potato marketing board. Nevertheless, I share the wish of the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) to see increased home production. He again proves that absolutely nobody supports the abolition of the PMB. I have not even heard the Government defend such a policy. Perhaps they will do so before the evening is through.
Although I, too, welcome the new faces in the ministerial team, I hope that they will bring new thinking and a fresh approach. In particular I hope that they will listen to the industry and those involved in production.
I support maximum consultation with the industry. I remind the Government of the massive and strongly felt opposition in Scotland to any abolition of the PMB. Although it is not a perfect institution, it has by and large served the interests of producers and consumers over the long term. If the Government had listened to Scottish farming views, the PMB would be in no danger of abolition. The scheme would certainly be modernised and improved, but there would not be the threat of abolition. I wonder whether the Scottish Office shares completely the views about abolition which have been expressed elsewhere. It seems that there are two voices. I hope that what I interpret as the Scottish Office voice will prevail. Perhaps it will and the Minister will surprise us all before the evening is through.
I remind the Government about the importance of the potato industry to Scotland. It is a major employer and a major source of employment in other, related industries. These decisions are of major importance to us. Scotland's ware industry and its crucial seed industry require both stability and direction if they are to plan ahead properly. I remind the Minister of the capital-intensive nature of the seed potato industry. I am told that the investment requirment is about £3,500 per hectare. Thus, any delay or doubt in decision-making simply destabilises the industry and, with uncertainty, investment simply stops. These

amendments would eliminate at least some of the uncertainty and allow the industry to participate in decisions about its own future.
There is a need for proper planning horizons. There is too much short-termism in the approach to agriculture. In the case of the potato industry, producers require firmer guidance as to the Government's intentions so that the industry may plan ahead properly. Producers have to look to markets and contracts. The sooner the Government clarify their decisions, the better. I am told that the actual production of potatoes takes a year and a half of forward planning. This extends to four years or more when capital investment, banking decisions, machinery, and so on, are taken into consideration.
That brings me to the argument about a level playing field. This is not just the use of a cliche; it really is an attempt to ensure that the industry will not -face massive disadvantages. Our industry has the quality and the expertise to beat any of its competitors if it is allowed a level playing field. The United Kingdom's potato industry is not a burden on British taxpayers, yet it has to compete against its European Community counterparts whose Governments positively finance their potato sectors. I am told that £7 million in loans was given to Spanish producers last year, that Italy supplied £50 million to its producers, that France has put £13 million, if not more, into its industry, and that Portugal gives growers an export subsidy. The British Government will put our industry at a great disadvantage if they abolish the potato marketing scheme while these competitors enjoy exactly such advantages.
The French Government are acting very quickly to help their industry. Currently they give Brittany's early potato growers assistance to the tune of millions of pounds to prevent market collapse in an area that provides about 80 per cent. of French early potatoes. The British Government must understand that it is little wonder that our industry is concerned about the abolition of market stabilisation measures here while direct competitors have such advantages given to them by their Governments. Does the Minister accept the concern of potato growers about the need for a level playing field? Can she give a guarantee that the potato marketing scheme will not be abolished while other European countries implement market stabilisation measures that are not available here? Can the Government guarantee that they will not revoke the scheme before the European Commission requires that to be done? Otherwise our industry will face massive disadvantages.
The industry requires consultation, stability and a level playing field so that it may plan for the future. Potato production is massively important to Angus—indeed, to Scotland—and the Government's overall strategic decisions will affect, in turn, a mass of associated industries and services. I am thinking of transportation, the supply of machinery and the very important processing sector.
In summing up, I put to the Government a plea for clarity of action so that producers and 'processors may begin to plan ahead. Confidence—or, more important, the lack of it—is a major factor affecting this sector of the industry.
A change of Ministers should provide an opportunity for second and cooler thoughts on the subject and allow those affected to have a real say in deciding their future. I


do not expect, however, that the Government will allow that freedom and that sort of decision-making power to our agriculture industry, more is the pity.

Mr. Cash: I agree absolutely with my hon. Friend the member for Lindsey, East (Sir P. Tapsell). [Interruprion.] We have corresponded on this matter. I want to get it on the record—because I have a direct constituency interest in this matter—that I endorse what he has said and many of the other remarks made during the debate.

The Minister of Agriculture, Fisheries and Food (Mrs. Gillian Shephard): This has been an extremely interesting debate. Not the least interesting feature has been the light in which we have now all been led to regard the hon. Member for Workington (Mr. Campbell-Savours). He has revealed himself as a capitalist, an entrepreneur, a faulty drafter of clauses, but an excellent drafter of potato marketing schemes. We have been treated to a vision of the hon. Gentleman in his bath and, finally, when he read the extract of what I said in 1989, he showed himself to be a wonderful female impersonator.
What is clear about the hon. Gentleman's performance is that his customary paranoia has not deserted him. He accused the Ministry of Agriculture, Fisheries and Food of rejecting his starred amendment, but he must know that that is a matter for Madam Speaker. I reject his accusation.
I noted that my hon. Friend the Member for East Lindsey (Sir P. Tapsell), in moving his amendment, attempted to compare me to the unfortunate Madame Cresson. I will pass over that comparison, the white helicopter and everything else. He spoke about processed potatoes, and I 'wonder whether he has noted the massive changes in the pattern of potato consumption in this country since 1975. In 1975, we consumed 143 lb of potatoes per head per year; in 1992, we consumed 110 lb per head per yeara considerable reduction. In the same period, the consumption of crisps has increased. In 1975, we consumed a mere 7 lb per head per year; in 1992 it increased to a staggering 17 lb per head per year. I am amazed by those figures. All I can say is that it is obvious the hon. Member for Workington has not been indulging, but I might have been. As to frozen chips, in 1975 we consumed 4·7 lb per head per year; in 1992 consumption rose to 18 lb.
Those figures should be noted because they indicate a great change in the demands on our potato processors. I would remind hon. Members, as did my hon. Friend the Member for Ryedale (Mr. Greenway), that processing also provides employment.
The hon. Member for North Cornwall (Mr. Tyler) should note that 30 per cent. of potato producers were in favour of abolition of the potato marketing scheme.

Mr. Tyler: I think that I am right in saying that that poll was taken some years ago and that a different situation has now arisen—particularly with the failure of the Council of Agricultural Ministers to arrive at a satisfactory alternative.

Mrs. Shephard: The EC position must be taken into account when we look at the issue, but I am sure that the hon. Gentleman would agree that many producers see the downside of what is, in many respects, an excellent scheme.
My hon. Friend the Member for Ryedale made a very balanced contribution and reminded us of the need to look at change in the consumption of potatoes and the demands on potato producers. The hon. Member for Pembroke (Mr. Ainger) referred to the JCC and Government intervention. The Government are intervening in the market this year to the extent of £1·5 million, which is not an inconsiderable sum.
We heard the usual sensible, balanced comment from my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown). I considered the Nottingham university report, which was commissioned by the potato marketing board. The university did not consult processors and its report contains some arithmetical errors. Nevertheless, it made interesting reading and I have studied it carefully.
The hon. Member for Angus, East (Mr. Welsh) reminded us of the need to consider the lack of processing capacity in Britain and to consider the reason for that.
Speeches have been balanced, but hon. Members have hinted heavily that we need to remember the changes that have occurred in the potato market.
I know that the Bill's provisions have caused a lot of anxiety among farmers, despite the fact that they are only enabling provisions. Representing the constituency that I do, and in the light of my words on 27 January 1989, I obviously understand the concerns of growers—

Mr. Campbell-Savours: No one would have known that the hon. Lady made that speech if I had not found it.

Mrs. Shephard: I could have referred the hon. Gentleman to it with no trouble at all. He should ask in future.
I understand that growers are concerned that the scheme that they know well and on which they have come to rely over the years might disappear.
Since taking up my post, I have considered the recent poll taken by the potato marketing board, but the view of the majority is not universally held. We must remember that retailers and processors as well as consumers—interestingly, nobody has mentioned consumers during the debate—have an input. Potatoes are an important crop in Britain. It has become a high-tech and successful industry. Producers set great store by it, but, as my hon. Friend the Member for Cirencester and Tewkesbury pointed out, a third of potatoes eaten in 1992 were in processed form and only 23 per cent. of those came from a United Kingdom provenance. We must consider the trend in the market if we are to retain a healthy potato industry.

Mr. George Kynoch: Does my right hon. Friend accept that we must not consider only the healthy trend in the market but ensure good production planning? Many of my constituents, to whom I referred in a recent letter to her, recognise that the acreage control is necessary for good management planning in potato production. Will she go further and say that she will press this point with our colleagues in Europe, rather than accept a rather loose European regime being imposed on us?

Mrs. Shepherd: I have received a representation from my hon. Friend and I shall bear his remarks in mind when we are working in Europe on this matter.
The Bill provides for two possibilities, depending on the existence or otherwise of an EC regime for potatoes. Let


me deal first with the situation should there be a regime. As hon. Members will know, the proposal that the Commission made last November is very lightweight. It does not provide any market support measures and if it is adopted in its present form it will mean the end of national arrangements here and elsewhere. We made it clear that, in the context of that proposal, we would not press for retention of quota and support buying arrangements because no other member states wished to adopt quotas. It clearly would not be in the interests of our growers, even if we were allowed to do so, to adopt quotas while others could grow as many potatoes as they liked.

Mr. Ainger: Does the right hon. Lady accept that in France the powerful co-operatives that supply seed and eventually market the produced potatoes operate, in effect, a quota system? Although the French Government do not set quotas, those powerful co-operatives are effectively operating a quota system.

Mrs. Shephard: I am not sure whether that is the case, although I would probably bow to the experience of the hon. Gentleman. If we limit our acreage, we could put our growers at a disadvantage without knowing the outcome of the EC scheme.

Mr. Malcolm Bruce: Is the Minister aware of the concern expressed by potato farmers in my constituency that the large seed developers and the seed merchants are taking more control over exactly what farmers can do, including for species of potato that have been established for 20 or 30 years? Is that not a restriction on the market that should be investigated? Farmers are telling me that the Plant Varieties and Seeds Act 1964 says that monopolistic practices by seed merchants and developers cannot be investigated because of a ruling of the House. Is that. sensible, and should not it be changed?

Mrs. Shephard: I accept, of course, that all growers wish to grow for a particular market. If there are matters which the hon. Gentleman wishes to draw to my attention I shall be happy to look at them. However, most growers are anxious to work with the market that they have.

Mr. Welsh: Can the Minister guarantee that she will not abolish the potato marketing scheme or give up the advantages of the potato marketing board before any European scheme is adopted?

Mrs. Shephard: I am coming to what I am prepared to do. The Bill prepares us to respond to any Community regime and to retain the constructive and desirable activities of the board, such as research and development and market promotion, if that is what growers want.
The Bill allows for establishement of a successor body for that purpose. Without the Bill, we would have no alternative but to revoke the scheme and wind up the board without the possibility of a successor and the protection of its important functions.
I should mention briefly what is happening in Brussels. The proposal was considered by the May Council together with presidency proposals incorporating marketing standards. There was no agreement on that and the Special Committee for Agriculture has been asked to do further

work. The proposal was not discussed at the June Council and it remains to be seen when it will be brought forward again.

Mr. Campbell-Savours: Will the Minister clarify something? If there is no European regime, is the Minister sure that she will then not revoke the scheme, or does she think she may have to revoke it even if there is an agreement?

Mrs. Shephard: Funnily enough, I was about to deal with that. In addition to all the other things we have described him as, the hon. Gentleman is perhaps a little impatient, but also has some foresight. I was about to say what might happen in the continued absence of an EC regime.
The Government have not made any decision to revoke the scheme. My hon. Friend and I want to acquaint ourselves first-hand with all the arguments, and we have set in motion meetings with the industry bodies concerned. We shall then be in a position to discuss the matter in an informed way with the Secretaries of State for Scotland and for Wales, who are also involved in making any decision.
I have made it clear that I want to spend a considerable amount of time and effort listening to growers, processors, retailers, packers and consumers before reaching any conclusions about the future of the scheme.
I am also aware that statutory decisions need to be taken shortly with regard to the 1994 crop year. The potato marketing board has to announce its quota arrangements by the end of August so that growers can plan their 1994 plantings. I am prepared to allow the present arrangements to apply to the 1994 season in order to give myself time.
The Government have retained the full spirit of the amendments made in another place. We have tidied up the amendments which their Lordships accepted would be necessary, but the thrust of the amendments is unaffected. They have as their most important effect the requirement to bring any decision to revoke the scheme, apart from one made in the context of an EC regime, back to Parliament for approval. That is sufficient safeguard for growers' interests in that it will ensure that a case for or against revocation would be heard in full and that informed debate would be guaranteed, should the Government consider that revocation is appropriate.
That brings me to new clauses 2, 3 and 4. The effect of the clauses would be that, in the absence of an EC potato regime, Ministers could not begin to take action to revoke the scheme even if it were patently obvious that it were necessary to do so, unless a poll of producers had shown a majority to be in favour of revocation. The informed debate in Parliament to which I have referred could not begin unless a certain group, of potato producers gave Parliament the go-ahead.
I am more than willing to listen to the views of growers and other interested parties, and to take them into account. However, I do not think it is on to subordinate proper parliamentary consideration of any issue to the views of a particular interest group. I do not think that Parliament's hands should be tied in that way; moreover, such action would remove the essential safeguard contained in the 1958 Act to prevent the potato marketing


board from damaging the interests of consumers. I hope that, in the light of the assurances that I have given, the House will reject the new clauses.
9.30 pm
Amendment No. 49 appears to me to reflect the procedure that I would propose to adopt before making any decision on the future of the scheme. I am sorry that it was rubbished by the hon. Member for Workington and by my hon. Friend the Member for East Lindsey (Sir P. Tapsell) into the bargain. I am happy to accept it. Amendment No. 50 is a little more problematic, because the wording is odd. It suggests that we should consult on the possibility of national measures after certifying that it was necessary to bring the potato marketing scheme to an end because its continued existence was inconsistent with an EC regulation. I do not think I could accept that the Government should be committed in those circumstances. I think the spirit of the amendment is that I should consult, and take account of the industry's views. As I am already committed to such action, I hope that the House will not accept the amendment.
I want a flourishing potato industry. I want our processors—who also provide a good many jobs—to be easily able to obtain the supplies that they want to process, so that we can discourage costly imports rather than using our own excellent potatoes. I want our producers, processors, retailers, packers and consumers to be delighted with this country's arrangements for the potato market, and I am prepared to take time to engage in discussions with interested bodies to ensure that that is what we achieve.

Dr. Strang: I think the House will agree that we have had an excellent debate, which has reflected the industry's views. The Minister's reply did more than justice to the discussions in which we have engaged.
The Minister referred to the position that would accompany an EC regime. Given our experience, that is the last thing that we want. The danger is that even a regime that started off relatively lightweight would end up like all the others, involving a huge cost to the taxpayer. That is an unsatisfactory way in which to support the market. I very much hope that there will be no question of the Government's allowing the EC to operate a fully fledged common potato regime: such a regime would probably create more of the problems experienced by other sectors of agriculture in this country, such as beef, milk and cereals, and bring about huge, costly surpluses.
The important part of the Minister's speech, however, related to the position without an EC regime. As she and other hon. Members have pointed out, the Council of Ministers has not made the progress towards a common regime that was expected. No one can be sure of the outcome, but it seems reasonable to assume that it will be some time before such a regime is agreed.
The Minister's response was very helpful. She said that, as things stood, the Government did not intend to wind up the potato marketing board: she said that no decision had been made and that she wanted to spend a long time consulting the industry about the future. She stated that the potato marketing board and the joint committee could go ahead and fix the target acreage and that the quotas could be in place for next year. They are positive advances and fully reflect the consensus in our debate, which did justice to the industry.
When the Minister examines the matter further, I believe that she will recognise the strength of the case for the potato marketing board. My hon. Friend the Member for Workington (Mr. Campbell-Savours) made a valuable contribution to the debate in destroying the argument initially put forward by Ministers that there were no other support arrangements within the EEC and that there was something peculiar about Britain's special domestic arrangements ror supporting our potato market. That is not the case. Many other Community countries have elaborate arrangements for supporting their potato industries.
We have had a most valuable debate. Anyone who is in any doubt about the change in the Government's position should have a casual look at some of the statements made by the Minister's predecessor, on Second Reading and especially in Committee. It is clear that the Government were intent then on unilaterally winding up the potato marketing board, but the Minister has now made it clear that the Government are not going ahead. For that reason, we shall not press the new clause.

Question put and negatived.

Clause 23

ACTIVATION OF PART II

Amendment made: No. 49, in page 13, line 27, at end insert

'(2A) Where subsection (2) above applies, no order shall be made under subsection (I) above unless the Ministers have consulted on a proposal to bring the Potato Marketing Scheme to an end with such persons appearing to them to he representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.—[Sir P. Tapsell.]

Clause 29

INFORMATION

Amendment made: No. 15, in page 17, line 28, leave out '21' and insert '14'.—[ Mrs. Gillian Shephard.]

Schedule 4

PROVISIONS RELATING TO CARRYING OUT OF APPROVED TRANSFER SCHEME

Amendments made: No. 77, in page 60, line 46, leave out from 'which' to first

'of' in line 47 and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.

No. 66, in page 61, line 1, leave out 'penalises' and insert

'has the effect of penalising'.

No. 78, in page 61, line 2, leave out `, or a transfer without consent,'.

No. 79, in page 61, line 3, leave out 'prohibits the effecting without consent' and insert

'imposes a qualified prohibition on the effecting'.

No. 60, in page 61, line 7, leave out 'private' and insert 'purposes other than public'.

No. 67, in page 61, line 14, leave out 'penalises' and insert

'has the effect of penalising'.

No. 80, in page 61, line 15, leave out 'without consent".

No. 81, in page 61, line 29, leave out 'prohibits' and insert

'imposes an absolute prohibition on'.

No. 82, in page 61, line 31, leave out paragraph (b).

No. 61, in page 61, line 32, leave out 'private' and insert

'purposes other than public'.

No. 68, in page 62, line 5, leave out 'penalises' and insert

'has the effect of penalising'.—[ Mrs. Gillian Shephard.]

Clause 47

FALSE STATEMENTS TO OBTAIN PAYMENTS

Mrs. Gillian Shephard: I beg to move amendment No. 43, in page 24, leave out lines 39 to 42 and insert
'knowing or recklessly makes a statement which is false or misleading in a material respect'.
I shall be brief. This is a technical amendment which does not affect the substance of part III. The creation of a single offence of knowing or recklessly making a false or misleading statement brings the offence into line with similar provisions in the Bill and in other statutes.

Amendment agreed to.

Clause 48

TIME LIMIT FOR PROSECUTIONS

Mrs. Gillian Shephard: I beg to move amendment No. 44, in page 25, line 3, leave out 'brought' and insert 'commenced'.

Mr. Deputy Speaker: With this it will be convenient to discuss also Government amendment No. 45.

Mrs. Shephard: I shall be equally brief. These are technical amendments. They do not alter the substance of part III. The purpose of substituting the word "commenced" for the word "brought" is to make the provisions compatible with Scottish criminal law.

Amendment agreed to.

New clause 15

COMMERCIAL ACTIVITIES OF MILK MARKETING BOARDS: DISTRIBUTION OF PROFITS

'.—(1) It shall be deemed to be an overriding requirement of a milk marketing scheme that any distribution in respect of profits attributable to any relevant commercial activities shall be made so as not to discriminate, as between persons who are registered as producers under the scheme—
(a) by reference to the identity of the person to whom milk is sold, or
(b) by reference to whether milk is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.

(2) The powers conferred by a milk marketing scheme on the board administering the scheme shall be deemed to include whatever powers are necessary for the purpose of giving effect to the requirement under subsection (1) above.

(3) For the purposes of subsection (1) above, the following are relevant commercial activities, namely—
(a) the separation of milk,
(b) the heat treatment of milk,
(c) the retail packaging of milk,
(d) the manufacture of milk products, and
(e) the provision of services for reward, otherwise than under the arrangements for the sale of milk to the board.

(4) In that subsection, the reference to a milk marketing scheme is to a scheme having effect under—
(a) the Agricultural Marketing Act 1958, or

(b) the Agricultural Marketing (Northern Ireland) Order 1982,
for the marketing of milk.

(5) This section shall apply in relation to any distribution the amount of which is declared on or after the passing of this Act, irrespective of when the profits concerned were made.'.—[Mr. Jack.]

Brought up, and read the First time.

Mr. Jack: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 46.

Mr. Jack: In the interests of brevity and taking into account Community law, may I say that the new clause will ensure that all registered producers are treated equally after the passing of the Bill in terms of the distribution of profits that the milk marketing boards make from their commercial activities.

Mr. Campbell-Savours: The new clause is of particular importance to Northern Ireland. If accepted, it would mean that all producers who were part of the milk marketing scheme in Northern Ireland would be eligible for a share in the profits of the processing arm, Dromona Foods. It would mean that the 400 producers who currently sell to Strathroy Milk Marketing, and not to the Northern Ireland milk marketing board, will receive a share of Dromona's profits. Some challenge that, arguing that that will happen after none of their milk has passed through a Dromona plant; that they have chosen to go the Strathroy route, their milk is exported to Ireland and they are paid a premium for this; and that they have not received a share of Dromona's profits in the past.
The Northern Ireland milk marketing board has told us that it wants to use Dromona's profits to help to offset the extraordinary costs of reorganisation, but if that were done under new clause 15, it could be charged with not distributing the profits fairly. Some people feel that it is odd that Strathroy producers should benefit from a share in Dromona's profits yet should not have to pay the costs of reorganising the Northern Ireland milk marketing board, which they will be free to join in the future.
Will the Minister explain the position? What is her interpretation of the impact of new clause 15 on that group of people?

Mr. James Molyneaux: The hon. Member for Workington (Mr. Campbell-Savours) has rightly said that the new clause is of great importance and interest to Northern Ireland, and it will be very much in the minds of all 17 Northern Ireland Members of Parliament regardless of their party affiliation.
As the hon. Gentleman said, the new clause amends not only the schemes in Great Britain but the scheme in Northern Ireland, although, as you will have noticed, Madam Speaker, the Bill does not apply to Northern Ireland except with regard to taxation matters. It should also be recognised that the current scheme in Northern Ireland differs from the schemes in Scotland and in England and Wales. As I understand it, the purpose of the new clause is to make it an overriding requirement that any distribution of profits attributable to commercial activities will be made in a manner that does not discriminate between registered producers under the scheme.
That requirement is based on the false premise that all registered producers operate similarly under the scheme.
After all, the concept of discrimination implies that like situations are treated differently. However, under the scheme, registered producers are permitted to operate differently. For example, they may sell their milk to the board or they may withhold it, if they choose to process their own milk or to export it. Those processors and exporters of milk are known as withholding producers, whereas those who sell their milk to the board are known as supplying producers. Both withholding and supplying producers are registered producers under the scheme, but it is clear that they operate differently. The new clause requires that they be treated identically with respect to sharing the profits of the scheme's commercial activities.
It must be recognised that about 400 producers, who produce approximately 10 per cent. of the milk in Northern Ireland, export that milk to the Republic of Ireland. They are registered under the scheme, but they supply no milk to the board and make no contribution whatever to the costs of operating the scheme. The new clause makes it an overriding requirement that such withholding producers share the profits of the commercial activities conducted under the scheme in exactly the same manner as producers who supply their milk to the board.
Those profits are made from the commercial business of converting the milk supplied into products and marketing them. The new clause requires that withholding producers share the profits made from the milk supplied to the board by supplying producers. The Bill, and subsequently an Order in Council for Northern Ireland, will wind up those schemes, and the board will then reorganise into organisations that all producers, both supplying and withholding, will be entitled to join. Clearly, that reorganisation will involve substantial costs and extraordinary charges—for example, accounting adjustments to cover write-offs, deferred taxation and costs such as redundancy.
If the profits of' the commercial activities are used to meet those charges in whole or in part, that could be interpreted as distribution of profits. If the new clause is accepted, it must be made clear that the Government do not intend the use of commercial profits to cover what I have called extraordinary charges and that those costs arising from reorganisation should be interpreted as a distribution of profits. If that is not the Government's intention. the Government are saying that those withholding producers are entitled to share in the profits of the board's commercial activities, but are not required to share the costs and the extraordinary charges associated with reorganisation.
Can the Minister assure me that the new clause will ensure equality of treatment for all registered producers in respect of the costs of reorganisation and any associated accountancy adjustments, as well as ensuring equality of treatment for all producers in respect of any distribution of the profits of commercial activities? Knowing the reasonable way in which the right hon. Lady and the Minister of State have reacted to all the sensible proposals made this evening and in Committee, I am confident that my proposals will meet with a favourable response.

Mr. Jack: I thank the right hon. Member for Lagan Valley (Mr. Molyneaux) for his courtesy in giving me notice of the general subject that he wanted to probe. I hope that I can deal with his specific points as well as the

more general issues raised by the hon. Member for Workington (Mr. Campbell-Savours). The hon. Member for Workington chose to describe a specific point of concern, but it must be seen in terms of the wider context and the policy that applies to that subject.
I shall first deal with the general issues relating to the basis for the distribution of profits from commercial activities. All registered producers have to operate within the terms set by the relevant milk marketing scheme, even where they are not bound to sell their milk to the board. The pricing structure of the entire market is dictated by the agreements reached between the board and the Dairy Trade Federation and the relevant joint committee. The Agricultural Marketing Act 1958 requires all registered producers to contribute to the debt of a board on a winding up, not just to those producers who sell to the board.
Therefore, to discriminate between producers who sell to the board and those who do not for the purpose of distributing commercial profits is not, in the Government's view, justifiable. It is certainly not acceptable to the European Commission, which believes that it would be contrary to the provisions of the European Community's regulations authorising the board's activities and to the principles of the Common Market. The Government have taken account of the Commission's views and the likelihood of action against us under article 169 of the treaty if we fail to act. Those are the clear benchmarks against which the distribution of profits is to take place. I hope that hon. Members who have raised issues on the subject will be able to draw the appropriate conclusions.
The right hon. Member for Lagan Valley raised separate issues about some of the expenses involved—for example, in connection with reorganisation. I think that he will immediately understand that my point about the distribution of profits from commercial activities is a separate issue. It deals specifically with how that particular gain is to be apportioned among members. It is possible for all registered producers to take a share of the costs involved with reorganisation, and that must be a decision for the appropriate board. The key factor is that costs and some of the other issues related to the distribution of profits mentioned by the right hon. Gentleman are separate.
Where Northern Ireland matters affect the legislation, the Minister of State, Northern Ireland Office—my near-neighbour, the hon. Member for South Ribble (Mr. Atkins)—asked me to ensure that he was kept informed of those issues. In light of what the right hon. Member for Lagan Valley has said, I shall undertake to do that. I shall give careful and detailed study to some of the other issues to see if there is anything about which it would be appropriate for me to write to him.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 16

BRITISH WOOL MARKETING BOARD: POWER TO GRANT RELIEF

'. For the purposes of section 727 of the Companies Act 1985 and Article 675 of the Companies (Northern Ireland) Order 1986 (power of court to grant relief in certain cases), the


British Wool Marketing Board shall be treated as a company and its members shall be treated as officers of it.'—[Mrs. Gillian Shephard.]

Brought up, and read the First time.

Mrs. Gillian Shephard: I beg to move, That the clause be read a Second time.

Madam Speaker: With this it will be convenient to discuss Government amendment No. 47.

Mrs. Shephard: My hon. Friend the Member far Hexham (Mr. Atkinson) tabled a new clause in Committee seeking to address a point of concern to the British wool marketing board. That arose from the fact that, in terms of legal liability, members and officers of the board did not currently enjoy a degree of protection equivalent to that ordinarily available to directors of limited companies.
The new clause tabled by my hon. Friend the Member for Hexham proposed to apply section 727 of the Companies Act 1985 to the board and the Government undertook to consider that point sympathetically. We have now done that. We understand the board's desire, given the ending of the guarantee, to take steps to address the usual risks associated with operating within a more commercial business environment.
New clause 16 therefore places the board members and executives on an equal footing with company directors with regard to scope for release from liability. Amendment No. 47, which amends clause 59, is linked to that and confirms the application of the new clause to Northern Ireland. I hope that it will be accepted by the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Schedule 5

REPEALS AND REVOCATION

Mrs. Gillian Shephard: I beg to move amendment No. 48, in page 66, leave out line 31 and insert—

1. The repeals in the Agriculture Act 1957 are without prejudice to sections 50(2) and 51(2) above.'.

This is a purely technical amendment. It deletes the current reference in schedule 5 to termination of the wool guarantee having effect from 1 May 1993. It follows from a Government amendment adopted in Committee to alter the date of the coming into effect of clause 50—then clause 48—from 1 May 1993 to the date of the enactment of the Bill. It also confirms that repeal of schedule 1 to the Agriculture Act 1957 does not affect the saving clauses in relation to the wool and potato guarantees. I hope that the House will accept the amendment.

Amendment agreed to.

Clause 59

SHORT TITLE, COMMENCEMENT AND EXTENT

Amendments made: No. 46, in page 30, line 6 at end insert

'section [Commercial activities of milk marketing boards: distribution of profits],'.

No. 47 in page 30, line 6 at end insert

'section [ British Wool Marketing Board: power to grant relief],'.—[Mrs. Gillian Shephard]

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.

Mr. Paul Marlow: It is a tremendous disappointment to me that my carefully prepared and statesmanlike speech cannot now be delivered in full because of the pressure of time. However, I take this opportunity to welcome my right hon. Friend the Minister of Agriculture Fisheries and Food and my hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food to the Front Bench.
Hon. Members and members of the trade outside—

Dame Elaine Kellett-Bowman: The profession.

Mr. Marland: I beg my hon. Friend's pardon. Members of the profession and hon. Members will be very reassured by the way in which my right hon. Friend the Minister and my hon. Friend the Minister of State have offered so kindly to be part of a listening Ministry and to leave the door open to people who want to see them at any time. There is a great deal of informed opinion on the Conservative Benches which would very much like to take advantage of that opportunity. I congratulate my right hon. Friend and my hon. Friend on the trenchant way in which they have gripped their brief.
I believe that three issues are of the utmost importance. First, there is the disputes procedure. I hope that my right hon. Friend will carefully study the proposals that were put forward by the milk marketing boards for a successor body. Secondly, with regard to Milk Marque's plans for the future, I have some sympathy with the view of the hon. Member for Workington (Mr. Campbell-Savours). Milk Marque is asking for a very wide brief. I urge my right hon. Friend to look carefully at that matter. Part of Sir Leon Brittan's brief in allowing a single voluntary co-operative to be established in this country is that it should not have such a wide brief as it is looking for.
Thirdly, we should keep an eye on the exploitation of the present milk shortage by producers and manufacturers, in the interests of our producers and manufacturers, especially our producers. We do not want to turn off the users of milk. If the price is too high, they will surely look elsewhere to source their manufacturing. Housewives and other milk drinkers will give up drinking milk or look elsewhere for milk substitutes. We do not want that to happen.
In the fullness of time, the tight quota regime might be relaxed. Furthermore, under the auspices of GATT, we might find that Commonwealth countries that had to give up their markets in this country when we joined the EC will look hungrily at our market to sell their surplus milk. Even our nearest neighbours, the Irish, are beginning to buy dairy companies in this country to take advantage of our larger market and their 200 per cent. excessive self-sufficiency.
The Bill must lead to a regime which will ensure long-term success and short-term prosperity for the milk producer. In that spirit, I really wish Milk Marque well. We need a viable dairy industry providing jobs for rural communities. We need satisfied customers'who continue to drink United Kingdom milk and consume United Kingdom dairy products, rather than becoming dependent on imports and milk substitutes.
I assure my right hon. Friend the Minister that many Conservative Members are anxious to see Milk Marque succeed and the United Kingdom dairy industry survive.
When the time comes for her to give her seal of approval to any scheme which is put forward by the milk marketing boards for a successor body, I should like her to remember that many Conservative Members are willing and anxious to give advice if my right hon. Friend considers that she needs it.

Mrs. Gillian Shephard: I shall respond briefly to my hon. Friend the Member for Gloucestershire, West (Mr. Marland). I thank him for his kind remarks. I assure him that we shall look most carefully at all the points that he raised in this excellent debate. I thank him also for wishing the Bill well.

Dr. Strang: The Bill has three important objectives: first, the winding up of the milk marketing boards; secondly, the enabling power to wind up the potato marketing board of Great Britain; and, thirdly, the ending of the wool guarantee. The Labour party opposes all three objectives. We believe that there was an opportunity in the 1980s to adapt the milk marketing boards. That was the view not only of the milk marketing boards but of producers and the Dairy Trade Federation. That opportunity was missed and we are concerned about the arrangements which will follow.
As for the potato marketing board, it would be churlish not to welcome the Minister's statement this afternoon. It was a viable statement, but of course the Bill contains the enabling power to wind up the potato marketing board on a future occasion. However, from what the right hon. Lady said, I trust that we have a good chance of ensuring that the board continues as long as there is not an EC regime.
We believe that the decision to end the guaranteed wool price was wrong. This is the worst of all possible times to do it. As hon. Members will be aware, wool prices are utterly depressed. All three changes were not sought by the industry. We have a very successful industry and milk of the highest quality in Europe. We have a very successful potato industry. The wool marketing board has served the industry well. For all those reasons, there is no case for this measure. It is based on Tory dogma and we will vote against the Bill.

Mrs. Gillian Shephard: I regret that the Opposition's contribution has ended on that note because I believe that we achieved a degree of consensus during the debate. The Government feel that the changes for milk and for wool represent new challenges for agriculture and that our magnificent industry will rise to those challenges. We will take a careful look at the potato industry.
I would particularly commend to the House the Government's marketing initiatives, which will be greatly strengthened by the Bill. I believe that the future looks good for one of our foremost industries and I am delighted to commend the Bill to the House.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 264, Noes 137.

Division No. 306]
[9.50 pm


AYES


Ainsworth, Peter (East Surrey)
Amess, David


Alison, Rt Hon Michael (Selby)
Arbuthnot, James


Allason, Rupert (Torbay)
Arnold, Jacques (Gravesham)





Ashby, David
Freeman, Rt Hon Roger


Ashdown, Rt Hon Paddy
French, Douglas


Aspinwall, Jack
Fry, Peter


Atkinson, David (Bour'mouth E)
Gale, Roger


Atkinson, Peter (Hexham)
Gallic, Phil


Baker, Rt Hon K. (Mole Valley)
Gardiner, Sir George


Baker, Nicholas (Dorset North)
Garnier, Edward


Baldry, Tony
Gillan, Cheryl


Banks, Matthew (Southport)
Gorman, Mrs Teresa


Bates, Michael
Gorst, John


Bellingham, Henry
Greenway, John (Ryedale)


Bendall, Vivian
Griffiths, Peter (Portsmouth, N)


Beresford, Sir Paul
Grylls, Sir Michael


Biffen, Rt Hon John
Hague, William


Blackburn, Dr John G.
Hamilton, Neil (Tatton)


Bonsor, Sir Nicholas
Hampson, Dr Keith


Booth, Hartley
Hanley, Jeremy


Boswell, Tim
Hannam, Sir John


Bottomley, Peter (Eltham)
Harvey, Nick


Bottomley, Rt Hon Virginia
Haselhurst, Alan


Bowden, Andrew
Hawkins, Nick


Bowis, John
Hawksley, Warren


Boyson, Rt Hon Sir Rhodes
Heathcoat-Amory, David


Brandreth, Gyles
Hicks, Robert


Brazier, Julian
Horam, John


Bright, Graham
Hordern, Rt Hon Sir Peter


Brooke, Rt Hon Peter
Howard, Rt Hon Michael


Brown, M. (Brigg & Cl'thorpes)
Howarth, Alan (Strat'rd-on-A)


Browning, Mrs. Angela
Howell, Sir Ralph (North


Bruce, Ian (S Dorset)
Norfolk)


Bruce, Malcolm (Gordon)
Hughes Robert G. (Harrow W)


Burns, Simon
Hughes, Simon (Southwark)


Burt, Alistair
Hunt, Sir John (Ravensbourne)


Butcher, John
Hunter, Andrew


Butler, Peter
Hurd, Rt Hon Douglas


Campbell, Menzies (Fife NE)
Jack, Michael


Carlisle, Kenneth (Lincoln)
Jackson, Robert (Wantage)


Carrington, Matthew
Jessel, Toby


Carttiss, Michael
Johnson Smith, Sir Geoffrey


Cash, William
Jones, Gwilym (Cardiff N)


Clappison, James
Jones, Nigel (Cheltenham)


Clark, Dr Michael (Rochford)
Jones, Robert B. (W Hertfdshr)


Clarke, Rt Hon Kenneth (Ruclif)
Kellett-Bowman, Dame Elaine


Clifton-Brown, Geoffrey
Kennedy, Charles (Ross,C&S)


Coe, Sebastian
Key, Robert


Congdon, David
Kilfedder, Sir James


Conway, Derek
King, Rt Hon Tom


Coombs, Anthony (Wyre For'st)
Kirkhope, Timothy


Cormack, Patrick
Kirkwood, Archy


Couchman, James
Knapman, Roger


Cran, James
Knight, Mrs Angela (Erewash)


Currie, Mrs Edwina (S D'by'ire)
Knight, Greg (Derby N)


Curry, David (Skipton & Ripon)
Knight, Dame Jill (Bir'm E'sfn)


Davis, David (Boothferry)
Knox, Sir David


Day, Stephen
Kynoch, George (Kincardine)


Deva, Nirj Joseph
Lait, Mrs Jacqui


Devlin, Tim
Lang, Rt Hon Ian


Douglas-Hamilton, Lord James
Lester, Jim (Broxtowe)


Dover, Den
Lidington, David


Duncan, Alan
Lilley, Rt Hon Peter


Duncan-Smith, Iain
Lloyd, Peter (Fareham)


Dunn, Bob
Lord, Michael


Durant, Sir Anthony
Luff, Peter


Dykes, Hugh
Lyell, Rt Hon Sir Nicholas


Eggar, Tim
Lynne, Ms Liz


Evans, David (Welwyn Hatfield)
MacGregor, Rt Hon John


Evans, Jonathan (Brecon)
MacKay, Andrew


Evans, Nigel (Ribble Valley)
Maclean, David


Evans, Roger (Monmouth)
McLoughlin, Patrick


Evennett, David
McNair-Wilson, Sir Patrick


Faber, David
Madel, David


Fabricant, Michael
Maitland, Lady Olga


Fenner, Dame Peggy
Malone, Gerald


Field, Barry (Isle of Wight)
Mans, Keith


Fishburn, Dudley
Marland, Paul


Forman, Nigel
Marshall, John (Hendon S)


Forsyth, Michael (Stirling)
Martin, David (Portsmouth S)


Forth, Eric
Mates, Michael


Fox, Dr Liam (Woodspring)
Mawhinney, Dr Brian


Fox, Sir Marcus (Shipley)
Mayhew, Rt Hon Sir Patrick






Merchant, Piers
Sproat, Iain


Mitchell, Andrew (Gedling)
Squire, Robin (Hornchurch)


Mitchell, Sir David (Hants NW)
Stanley, Rt Hon Sir John


Moate, Sir Roger
Steel, Rt Hon Sir David


Molyneaux, Rt Hon James
Steen, Anthony


Monro, Sir Hector
Stephen, Michael


Montgomery, Sir Fergus
Stern, Michael


Nelson, Anthony
Stewart, Allan


Neubert, Sir Michael
Streeter, Gary


Nicholls, Patrick
Sumberg, David


Nicholson, David (Taunton)
Sweeney, Walter


Nicholson, Emma (Devon West)
Sykes, John


Norris, Steve
Tapsell, Sir Peter


Oppenheim, Phillip
Taylor, Ian (Esher)


Ottaway, Richard
Taylor, John M. (Solihull)


Page, Richard
Taylor, Matthew (Truro)


Paice, James
Temple-Morris, Peter


Patnick, Irvine
Thomason, Roy


Patten, Rt Hon John
Thompson, Sir Donald (C'er V)


Pawsey, James
Thompson, Patrick (Norwich N)


Peacock, Mrs Elizabeth
Thornton, Sir Malcolm


Pickles, Eric
Thurnham, Peter


Porter, Barry (Wirral S)
Townsend, Cyril D. (Bexl'yh'th)


Porter, David (Waveney)
Trend, Michael


Portillo, Rt Hon Michael
Trimble, David


Powell, William (Corby)
Twinn, Dr Ian


Rathbone, Tim
Tyler, Paul


Redwood, Rt Hon John
Viggers, Peter


Rendel, David
Walden, George


Renton, Rt Hon Tim
Wallace, James


Richards, Rod
Waller, Gary


Rifkind, Rt Hon. Malcolm
Ward, John


Roberts, Rt Hon Sir Wyn
Wardle, Charles (Bexhill)


Robertson, Raymond (Ab'd'n S)
Wells, Bowen


Robinson, Mark (Somerton)
Wheeler, Rt Hon Sir John


Roe, Mrs Marion (Broxbourne)
Whitney. Ray


Rowe, Andrew (Mid Kent)
Whittingdale, John


Ryder, Rt Hon Richard
Widdecombe, Ann


Sackville, Tom
Wilkinson, John


Shaw, David (Dover)
Willetts, David


Shaw, Sir Giles (Pudsey)
Wilshire, David


Shephard, Rt Hon Gillian
Winterton, Mrs Ann (Congleton)


Sims, Roger
Winterton, Nicholas (Macc'f'ld)


Skeet, Sir Trevor
Wolfson, Mark


Smith, Tim (Beaconsfield)
Wood, Timothy


Smyth, Rev Martin (Belfast S)
Yeo, Tim


Soames, Nicholas
Young, Rt Hon Sir George


Speed, Sir Keith



Spencer, Sir Derek
Tellers for the Ayes:


Spicer, Sir James (W Dorset)
Mr. David Lightbown and Mr. Sydney Chapman.


Spicer, Michael (S Worcs)



Spink, Dr Robert





NOES


Adams, Mrs Irene
Brown, N. (N'c'tle upon Tyne E)


Ainger, Nick
Byers, Stephen


Ainsworth, Robert (Cov'try NE)
Callaghan. Jim


Ashton, Joe
Campbell, Mrs Anne (C'bridge)


Austin-Walker, John
Campbell, Ronnie (Blyth V)


Bayley, Hugh
Campbell-Savours, D. N.


Bennett, Andrew F.
Canavan, Dennis


Benton, Joe
Cann, Jamie


Bermingham, Gerald
Clapham, Michael


Bray, Dr Jeremy
Clelland, David





Clwyd, Mrs Ann
McLeish, Henry


Connarty, Michael
McMaster, Gordon


Cousins, Jim
Mahon, Alice


Cryer, Bob
Mandelson, Peter


Cunningham, Jim (Covy SE)
Marshall, Jim (Leicester, S)


Dafis, Cynog
Maxton, John


Dalyell, Tarn
Meale, Alan


Davidson, Ian
Michael, Alun


Davies, Ron (Caerphilly)
Michie, Bill (Sheffield Heeley)


Davis, ferry (B'ham, H'dge H'l)
Milburn, Alan


Dewar, Donald
Miller, Andrew


Dixon, Don
Morgan, Rhodri


Dobson, Frank
Morley, Elliot


Dowd, Jim
Mowlam, Marjorie


Dunwoody, Mrs Gwyneth
Mudie, George


Eagle, Ms Angela
Mullin, Chris


Enright, Derek
Murphy, Paul


Etherington, Bill
O'Brien, Michael (N W'kshire)


Evans, John (St Helens N)
O'Hara, Edward


Ewing, Mrs Margaret
Olner, William


Flynn, Paul
Pickthall, Colin


Foster, Rt Hon Derek
Pike, Peter L.


Foulkes, George
Powell, Ray (Ogmore)


Fyfe, Maria
Prentice, Ms Bridget (Lew'm E)


Gerrard, Neil
Prentice, Gordon (Pendle)


Golding, Mrs Llin
Primarolo, Dawn


Gordon, Mildred
Purchase, Ken


Griffiths, Nigel (Edinburgh S)
Quin, Ms Joyce


Griffiths, Win (Bridgend)
Raynsford, Nick


Gunnell, John
Robertson, George (Hamilton)


Hain, Peter
Rogers, Allan


Hall, Mike
Rooker, Jeff


Hardy, Peter
Rowlands, Ted


Hill, Keith (Streatham)
Ruddock, Joan


Hinchliffe, David
Salmond, Alex


Howarth, George (Knowsley N)
Short, Clare


Howells, Dr. Kim (Pontypridd)
Skinner, Dennis


Hughes, Kevin (Doncaster N)
Smith, Andrew (Oxford E)


Hughes, Robert (Aberdeen N)
Soley, Clive


Hughes, Roy (Newport E)
Spellar, John


Hutton, John
Steel, Rt Hon Sir David


Jackson, Glenda (H'stead)
Strang, Dr. Gavin


Jackson, Helen (Shef'ld, H)
Taylor. Mrs Ann (Dewsbury)


Jones, Barry (Alyn and D'side)
Tipping, Paddy


Jones, Jon Owen (Cardiff C)
Turner, Dennis


Jones, Lynne (B'ham S O)
Walley, Joan


Jowell, Tessa
Warden, Gareth (Gower)


Keen, Alan
Watson, Mike


Kennedy, Jane (Lpool Brdgn)
Welsh, Andrew


Khabra, Piara S.
Wicks, Malcolm


Lewis, Terry
Williams, Alan W (Carmarthen)


Litherland, Robert
Wilson, Brian


Lloyd, Tony (Stretford)
Winnick, David


Llwyd, Elfyn
Wise, Audrey


Loyden, Eddie
Worthington, Tony


McAllion, John
Wright, Dr Tony


McAvoy, Thomas



McCartney, Ian
Tellers for the Noes:


McFall, John
Mr. Peter Kilfoyle and Mr. Eric Illsley.


McKelvey, William



Mackinlay, Andrew

Question accordingly agreed to.

Bill read the Third time, and passed, with amendments.

Council Tax (Wales)

Motion made, and Question proposed,

That the draft Council Tax Limitation (Wales) (Maximum Amount) Order 1993, which was laid before this House on 21st June, be approved.—[Mr. Redwood.]

Mr. Paul Murphy: I am grateful to the Secretary of State for moving the motion formally. I know that he intends to make a longer speech later perhaps to explain why he decided this week not to cap Aberconwy borough council in north Wales. Of course we welcome the decision ostensibly to let that council off the hook. However short the debate might be, it will give the House the opportunity to examine the Welsh Office system of controlling our local authority expenditure in Wales, in particular as it affects Aberconwy borough council. I know that it will be of considerable interest to the Minister of State, Welsh Office, because he represents a great part of that borough.
We are all completely united in the sympathy we express to the people of Aberconwy over the tragic flooding in that area some weeks ago. It is that, above all else, which has caused the Secretary of State to change his mind over the capping decision for Aberconwy. We should not have the impression that, because the capping has been lifted, all is well with Aberconwy. I understand that the burdens on that local authority as a direct result of the flooding tragedy extend to well over 1,000 homes that have been affected in some way or another. At least half those homes are in the ownership of the local authority. That means that an enormous bill, affecting both capital and revenue, will fall on that relatively small council in north Wales. Some estimate that the floods will cost £3·5 million on local authority housing repairs alone. In addition, damage was done to the roads and other infrastructure.
I note that when, in this Chamber, the Secretary of State referred to those floods, and when his Minister of State referred to them outside the House, both praised the work of the local authorities. The Secretary of State also told us that the so-called Bellwin formula would apply to the council. That formula is supposed to top up the finances of the local authority where it meets an unforeseen circumstance or tragedy, such as occurred there.
We have to tell the Secretary of State, however, that there is much wrong with the way in which the Bellwin formula operates. It is over-complex. Only what are termed "relevant costs" are considered. I can only begin to imagine the disputes that could well occur between local authorities, Government Departments and others about what "relevant costs" will be. Under the formula, any works connected with the alleviation of the problems caused by the flooding must be dealt with within two months. Any engineer would tell us that that would be almost impossible to achieve.
The financial basis of the Bellwin formula has yet to be updated from last year. Perhaps most tellingly of all, my hon. Friend the Member for Pontypridd (Dr. Howells) will tell us that the formula did not successfully apply in his borough of Taff Ely, because it did not meet the rather stringent conditions laid down in the Bellwin formula. Obviously, I hope that that is not the case in north Wales, and that the Bellwin formula will give as much financial aid as possible to that stricken area.
This week, in reply to a parliamentary question that I tabled, the Secretary of State said that, although he is not capping Aberconwy as he intended, reserves will have to be used, and that cuts may have to be made in other services that Aberconwy borough council provides to avoid capping above the figure that we are agreeing today.

Mr. Allan Rogers: Does my hon. Friend agree that the Secretary of State's announcement not to cap Aberconwy is in a sense hypocritical, because the original budget was based on the Government's perception of the needs of the community? All the Secretary of State is saying is, "You can keep that money, but the cost of this disaster is over and above that." If the alleviation of the capping is intended to help with the cost of the flooding, it does not help in any way in relation to other needs. People's primary needs will be neglected to fulfil the needs caused by the flooding.

Mr. Murphy: The amount that we are talking about is £168,000. That is the difference between the capped budget, as it was before the Secretary of State changed his mind, and what the borough council decided was necessary to provide the various services that it is called upon by the House of Commons to provide. My hon. Friend is quite right: this will merely get us back to square one. The council will have to provide out of its own budget much more than the £168,000 of difference between the two figures. That can mean only that its services—housing, environmental health, and so on—will suffer as a result of the tragedy in the borough. It is eminently unfair that such a tragedy must be accompanied by curtailment of basic services.
I fancy that Aberconwy must be way down the list of local authorities that anyone might have thought likely to be capped. Why should it be capped? The town is relatively innocent and has a recently besieged council. With a population of 55,000, it is quite small, even by Welsh standards. As I have said, it is represented in this House by the Minister of State. Its council is probably the nearest thing to a coalition local authority that Wales has. Last year, when the budget was set, three councillors were Liberal, three were Labour, one was Conservative, and the mayor was independent. A Conservative on the Council of Welsh Districts was the representative of Aberconwy borough council.
Most significantly, the decision to appeal against capping was reached unanimously by parties all of which are represented in the House of Commons. In 1988 the council commissioned a survey. Even then it felt that it was getting rough justice from the Welsh Office. The Chartered Institute of Finance and Accountancy said:
Aberconwy borough council is a relatively low-spending, highly rated authority, with expenditure on tourism accounting for up to one fifth of its budget. The block grant has failed adequately to reflect these three factors.
The local authority has received only one letter of complaint since it set the budget that was to be capped by the Welsh Office. Even the chairman of Llandudno's hoteliers and restaurateurs—not a very revolutionary body of people, I imagine—has written to the Welsh Office praising the council for what it has done over the past few years to achieve service records.
Let us look at the spending figures. Only 12 Welsh local authorities had a smaller year-on-year increase than Aberconwy borough council. Other councils had bigger


increases. South Pembrokeshire. which has an independent council, had a budget increase of 23·5 per cent., and in Dinefwr the increase was 22 per cent. Such figures are replicated throughout Wales. But, because of the standard spending assessment system, Aberconwy has been trapped as an unwilling victim of the capping system. This is ludicrous.
Above all, the inability of standard spending assessments to deal properly with the fact that, in effect, Aberconwy is the tourist capital of Wales means that, in reality, it has been capped.

Mr. Jonathan Evans: The tourist capital?

Mr. Murphy: Many hon. Members will realise that tourist areas do not attract from such bodies as the Welsh Development Agency, the local authorities and the European Community the investment that industrialised areas attract.
It is important to remember also that they have to spend money not only on their own residents but also on holidaymakers. They must spend money on promenades, swimming pools, theatres, cinemas, parks and so on. That expenditure is not taken into proper account by the SSA system and the grants available through the Welsh Office.
The hon. Member for Brecon and Radnor (Mr. Evans) may deride my opinion about Aberconwy being one of the tourist centres of Wales, but he should appreciate that, of all serviced hotel beds in the Principality, almost 20 per cent. are within the boundaries of Aberconwy.
What makes the SSA system even dafter is that the reason south Pembroke is not affected by the capping order, unlike Aberconwy, is that that system takes into account the provision of caravans as well as hotels. If there are more caravans in a particular borough, it is counted as having more beds, so it gets more money. If there are more hotels in a borough, it gets less money. That quirk and the ludicrous notion has meant that Aberconwy has been caught in the trap of the insane SSA system.
Hon. Members should also note that the Audit Commission recently published a report on SSAs in which it concluded that they are, effectively, instruments for dealing with capping rather than the distribution of grant. It also drew attention to the fact that they are oversimplified and based on out-of-date information contained in the 1981 census. I hope that our new Secretary of State for Wales will do what his English counterpart has done and review the whole system of SSAs to ensure that, in future, authorities such as Aberconwy, which is not by any stretch of the imagination profligate, are not caught by that ludicrous system.
If there were no SSAs, I am sure that the Government would argue that the power to cap remains an important means of controlling local authority spending. In a recent answer to my hon. Friend the Member for Blackburn (Mr. Straw), however, the Chief Secretary to the Treasury said that the Treasury had not worked out the effects of local government spending on the economy and on macroeconomic indicators such as jobs, services and interest rates.
No one can tell me that, because little Aberconwy council will spend a few hundred thousand pounds more than the Secretary of State believes it should, that will have a detrimental effect upon our economy.
The practice of capping was born out of a distinct hatred of Labour local government. The Secretary of State has gone wrong, however, because he could not find any Labour local authorities to cap. He has had to pick on Aberconwy as a last resort. Under the regime, budgets are not set by locally elected politicians, as they should be. Councils are now effectively capping themselves. What is worse, the system of SSAs is condemned by councils of every political persuasion, and of none, in Wales and beyond.
In July 1991, The Times stated that capping
is an offence against local democracy far more outrageous than anything Mr. Delors is proposing for monetary and political union.
Most hon. Members and those of all parties serving in local government would agree with that analysis.
The decision to cap in Wales is particularly pernicious because, until now, we have never had to operate under such a system. The Minister of State and the Under-Secretary could tell the House that, year after year, there has been no need for capping in Wales. Under the old system, councils and districts worked with the Welsh Office to avoid that. It is a pity that that did not happen this time, because we would then not have to deal with this daft nonsense.
Worse than that, however, what is now occurring is completely against the grain of local democracy, which is so important to the Welsh culture. That culture is deeply offended by the bypassing of local democracy and the growth of quangos. I fear that it means that the Welsh Office is simply following what is laid down in Whitehall. That is not good for anyone in Wales who is involved with local government, education or any other service.
Unlike some of the English local authorities, of all parties, Welsh local authorities have never been profligate. They are now faced with savage cuts as a result of the worst rate support grant settlement in living memory. Wales is heavily dependent on public services, however, and our local authorities are in the front line of their delivery. It is an affront not simply to local democracy but to people who have to rely on those important services that capping must be considered in the first place.
We must work towards achieving a fairer system of local government finance and grant distribution. We must abandon capping and replace it with proper accountability through the ballot box, as in most other European countries. Who do these Ministers think they are to tell local authorities in Wales what should occur? What if Aberconwy or any other authority in Wales decides that it wants to offer better services than it can provide with the money that it receives from the Welsh Office? Why cannot it do that? It will be held accountable when local elections are held.
More often than not, such authorities know more than Welsh Office Ministers about the realities and priorities in their areas. Instead of bullying small local authorities like Aberconwy, the Conservative party would do better to put its own financial house in order.

Mr. Elfyn Llwyd: I have the honour of representing part of the borough of Aberconwy; it is not simply the Minister of State's patch.
Aberconwy commissioned a report on its grant-related expenditure assessment in 1988. It advanced a strong case to the Secretary of State, highlighting many of the points to which the hon. Member for Torfaen (Mr. Murphy) referred. Those special points are relevant perhaps more to Aberconwy than any other borough or district in Wales.
The main industry in Aberconwy is tourism, a by-product of which is the need to provide promenade cleaning, extra street cleansing, public toilets, refuse collection and so on. Aberconwy has 18 per cent. of total Welsh serviced accommodation. That gives some idea of the scale of the tourist operation in the area.
Aberconwy has been making its voice heard in the Welsh Office, apparently to little effect, because it has been less than happy about the way in which SAAs have operated. It proposed a sensible and well-argued case and commissioned an expensive but well-documented report. It has made the case for the borough to be treated differently.
The extra expenditure that I have referred to falls directly on the local taxpayer, bearing in mind that the commercial rate element will be calculated solely by reference to the registered charge payer, which excludes all visitors, who of course generate the need for extra services. As a prime tourist area, Aberconwy is particularly vulnerable to that anomaly, with its high incidence of holiday serviced accommodation and large day visitor population.
The Welsh Office has had five years to consider Aberconwy's case, but it has not given any positive response. One graphic example, perhaps, of the special nature of Aberconwy is the fact that the borough has six fairly extensive promenades to maintain—all at considerable cost.
Uniquely, Aberconwy is underprivileged because it receives no funding from Europe. I plead with the Minister about objective 5b status. I recently went to Brussels to argue the case for the borough. I sincerely hope that the Minister of State and the Secretary of State will consider Aberconwy's case. The A55, welcome though it is, runs across the north Wales coast. To the east, there is some assistance from European funds, and to the west likewise, but the A55 is effectively ensuring that any investment speeds through Aberconwy. I am sure that the point is obvious from the way in which it now qualifies. It qualified five years ago under the criteria that then applied, but it has a strong case now and I urge the Welsh Office to consider it in due course. I am sure that it will.
The recent standard spending assessment changes in social benefit have also had a considerable effect on the finances of Aberconwy. Information on the enhanced population generally and for recreation is derived from two particular statistical sources—the "All Wales Tourism Statistics" and the "Long Distance Travel Survey".
In principle, the council does not query the basis of the source of information, but it takes issue with the weighting factors used in respect of serviced accommodation and caravans—another point which the hon. Member for Torfaen rightly referred to in opening the debate. Serviced

accommodation such as hotel bed space has a weighting factor of one, while caravans attract a factor of four multiplied by the number of caravans concerned.
As stated in the report to which I referred, it is contended that large caravan sites do not face the level of requirement to spend as a result of tourism because many caravan parks are self-contained. The difference in waiting clearly gives great advantage to those areas where large caravan or camp sites exist.
I should also refer to the application of the composite secondary indicator which causes wide variations in the calculation of the SSA. There is little doubt that where high unemployment exists there is greater need to spend, but does the factor of population in unfit properties cause authorities to spend on such matters, or are they content to derive benefit in terms of SSA without placing an increased call on their expenditure? Similarly, in more densely populated areas, it is reasonable to conclude that it is relatively more costly to service population areas that are more diverse.
Unemployment in the borough was 8·6 per cent. in April 1991, 9·7 per cent. in April 1992 and 10·3 per cent. in April 1992—a total of 2,293 people out of work. There is also the added need for attraction-related expenditure such as promenades, swimming pools and leisure centres, all at great cost and highly necessary in the competitive world of leisure.
Tourism is the principal industry; it is vital to the borough. It is reasonable to expect, therefore, that the cost of supporting and investing in that industry should be adequately recognised by the block grant mechanism. Significant tourist areas such as Aberconwy do not extract the same level of outside investment from the development agencies, county councils and the EC as manufacturing industrial areas. That places a heavy demand on the district council to fill the void.
The economic success of areas such as Aberconwy is dependent on the holiday industry which is becoming increasingly competitive. The true costs of tourism to a local authority are difficult to determine. An independent survey commissioned by the council in 1984 concluded that the total direct and indirect revenue costs to the council approximated at a minimum one fifth of the council's annual net rate requirements. While the figures may be open to interpretation, they illustrate that the cost of tourism to the council should not be overlooked and is a significant factor.
It is important to recognise that expenditure on tourism falls into two different categories—population and attraction-related expenditure. I have mentioned attraction-related expenditure, but the population factor is of equal importance. It results from an influx of visitors which creates a demand for extra services.
Population-related services include planning, street cleansing, refuse collection, car and coach parks, all at great cost. However, the central problem in evaluating the effect of increased population as a result of tourism is that there is no comprehensive or accurate source of information on bed nights and day ' visitors. Proxy information is used based on the information which the Welsh tourist board collects. That is based partly on an inventory maintained by the tourist board collected from providers of accommodation which may or may not be accurate, but it is hardly a scientific approach to the problem.
The council estimates that visitor nights and day trips are far in excess of those shown in the GREA for enhanced populations. A recent survey by Gwynedd county council in 1984 estimated that the WTB figures for Aberconwy could be out by as much as 30 per cent. which is a decidedly important figure. The situation is exacerbated by the introduction of the new caravan data, and the abolition of the long-distance travel survey information. Aberconwy is not an area of high caravan occupation; as I have said, it is an area of serviced accommodation. The new data will put more emphasis on caravan occupation. I consider that misplaced, as caravans do not require the same servicing by public authorities as traditional holiday accommodation.
It is a supreme irony that Aberconwy should be saved from capping, albeit for a short while, by the recent flood disaster. However, effectively it will still suffer from rate capping. Under the Bellwin formula, it will have to find 15 per cent. of the qualifying expenditure in dealing with the effects of the storms and floods that hit the area some weeks ago. That will inevitably mean a cut in services; there is no other answer. The cut will be all the more serious because of the large number of elderly retired people who live in the borough.
I hope that the Government will look again at Aberconwy's plight and its reasoned, persuasive arguments, and will ensure that it can set a budget for next year that will enable it to enhance and improve local services rather than cut them—which is likely to be the regrettable, and avoidable, cost to the charge payers of Aberconwy. I ask the Government to reconsider the way in which they have been let off the hook, as the hon. Member for Torfaen put it earlier. They have hardly been let off the hook in real terms; the burden is extremely heavy. I urge the Welsh Office to reconsider.

Mr. Nigel Jones: I send greetings to the House from my hon. and learned Friend the Member for Montgomery (Mr. Carlile), who is on a parliamentary delegation to Romania.
I welcome the Secretary of State to his new role. I know that he will have a wonderful time meeting the people and visiting the places in a beautiful nation which is also very near Gloucestershire. I also welcome the Government's change of mind over the capping of Aberconwy. It seemed bizarre when it was first announced that the Government intended to cap it to reduce average council tax hills by the magnificent sum of 2p a day.
The position was summed up by the distinguished journalist Iorwerth Roberts in the Daily Post on Wednesday April 28. He said:
Aberconwy has no record of irresponsible spending, and its council tax is no higher than many of its neighbours. Making an example of it for the sake of a mere £8 a house seems to be using a sledgehammer to crack a tiny nut.
It is good that the new Secretary has seen sense, and is allowing elected local councillors to set a budget at the level that they judge is needed to provide high-quality, properly managed services at a price that local people are prepared and able to pay.
It does not surprise me that the right hon. Gentleman has made that decision. He is a fair-minded man; I have some experience of that. Last year, he was the Minister

who heard the capping appeal from my own county council, Gloucestershire, and I am sure that he was instrumental in raising the cap on that occasion. I feel a tinge of regret that, having shown a talent for listening then, and again in the case of Aberconwy—a talent rare in the present Government—the right hon. Gentleman has moved into his new job too soon, leaving this year's English capping decisions to a new and disappointing team at the Department of the Environment.
It would have been perverse of the Government to continue with their plan to cap Aberconwy, which is not a loony, high-spending council. The hon. Member for Torfaen (Mr. Murphy) reminded the House of the severe damage and disruption caused to the area on 10 and 11 June, when serious flooding took place. Along with other hon. Members, I seek an assurance that the Government's lifting of the cap is not the end of the story for the people of Aberconwy. As the Secretary of State will know, 4,000 people are registered as having been affected by the floods, in which 5 in of rain fell in three hours. The House will know of the widespread discontent among local authorities about the formula that the Government use to determine standard spending assessments. SSAs are to accuracy what Evel Knievel is to road safety.
Only today, at the Association of District Councils' conference in Bournemouth, a motion was passed, with support from all parties, expressing no confidence in the formula. I understand that a Conservative councillor from Buckinghamshire was tempted to table an amendment saying that he had little confidence in the formula, but he was persuaded to withdraw it at the last moment.
Following the disaster in north Wales, the Government should consider an additional parameter. When calculating SSAs, they should take into account an area's propensity to flood. I cite as an example the Meadows estate and the surrounding area at Llandudno junction, which have flooded four times in 16 years. It seems that natural disasters are becoming more frequent as a result of ecological change.
As the hon. Member for Torfaen said, the Bellwin formula is insufficient to deal with the problem. Only 85 per cent. of the money can be recovered. If a local authority needs to spend £5 million, £750,000 has to be met from its budget. In Aberconwy, between 600 and 700 council houses are currently uninhabitable because of the floods, yet social fund loans are available only to those on income support and are currently taking six weeks nationwide to process.
In addition to the welcome lifting of the abhorrent cap, we need a system of crisis fund payments. The Prime Minister will have received a letter from Roger Roberts, whom the Minister of State will know as his Liberal Democrat opponent at the election. Roger Roberts is asking for £2 million as a starter for the crisis fund payments. Many elderly people's bungalows have been flooded for the second time in two years, but there seems to be little hardship help. Will the Secretary of State give an assurance that help will he forthcoming? Will he use his new-found influence in Cabinet to persuade the Government to abandon capping once and for all because it is a democratic abomination?

The Secretary of State for Wales (Mr. John Redwood): The hon. Member for Torfaen (Mr. Murphy) asked me to explain the basis of my decision and I am happy to do so.
In coming to my decision on a final cap for Aberconwy, I took very careful account of all the relevant information available to me, including the representations made to me by Aberconwy and the severe flooding that occurred between 10 and 11 June. I saw the extensive damage for myself when I visited the borough on 11 June and, as the House knows, I announced on 14 June that financial assistance through the Bellwin scheme would be available to local authorities to meet 85 per cent. of their revenue costs for emergency arrangements and repairs.
Aberconwy's preliminary assessment is that the revenue costs for remedial work and for the accommodation of the temporarily homeless will be about £3 million. The authority considers that its share of that under the Bellwin rules, coupled with the loss of revenue from tourism and conference facilities which have been damaged, could amount to more than £500,000, although I hope that that will prove to be an overestimate.
The authority will have to meet the costs by drawing on its reserves and curbing the budget for other services. I am told that it currently has reserves of £448,000, which would enable the council to meet its obligations. It is not legally permissible to put a higher figure in the order than the original budget and I have decided that, in these exceptional circumstances, the confirmation of the provisional cap of £8,566,950 could prejudice Aberconwy borough council's ability to maintain an acceptable level of services for its residents while meeting the costs of the floods. For that reason I ask the House to approve a final cap of £8,734,695, the sum of the authority's original budget—the maximum permissible.

Mr. Murphy: The Secretary of State said that the local authority has about £400,000 worth of reserves. He will, of course, be aware' that district auditors and the Audit Commission are anxious that all local authorities should have a reasonable balance in their accounts. Would not it be wrong to take away such a large sum and leave the council with no balances at all, as a result of having had to tackle the flooding, which is totally beyond its power?

Mr. Redwood: The hon. Gentleman is right that some reserves must be left and it is up to the council, its advisers and its auditor to decide what would be a prudent reserve. I am sure that the hon. Gentleman would agree that £448,000 for a council of that size leaves it considerable scope to pay the bills that will, unfortunately, fall to it as a result of the tragedy.
I stress that the flooding is the sole reason for my decision to relax the cap. If the events of the weekend of 10 June had not taken place I should be asking the House to approve the proposed cap of £8,566,950 notified to the authority on 26 April. Aberconwy has been generously treated under recent local authority revenue settlements. Hon. Gentlemen have asked questions tonight about the adequacy of its standard spending assessment, but I must tell the House that its SSA of £8,487,933 for 1993–94 represents an increase of 14·5 per cent. over that for 1992–93, and that for the three years 1991–92, 1992–93 and 1993–94 taken together its SSA has increased by 58·39 per cent., a level of increase more than 14 percentage points higher than the average increase in district SSAs over the

same period. I hope that the House will agree that that is a large increase, at a time of recent restraint on general public expenditure.
The hon. Member for Torfaen was a little more cautious in his remarks than the hon. Member for Caerphilly (Mr. Davies), who went to Llandudno shortly after I did, and tried to terrify local people into believing that there would be no Government support whatever for the council at this time of great stress. That is most regrettable, as I promptly announced the Bellwin formula, which provides substantial aid in such difficult situations, and I have now announced that there will be no restrictive cap on the authority, so it will be allowed to spend at its previous budget level.
Of course, the hon. Member for Torfaen is right to say that I expect the council to make some use of its reserves and to manage its resources well.

Mr. Ron Davies: The Secretary of State referred to the increase in the expenditure that the local authority is allowed during the current financial year. When he has been in the job a little longer he will have had the chance to read the records and then he will realise that that apparent increase is a direct result of this year's financial settlement for Welsh local authorities, in which the bulk of support was transferred from the county authorities to district authorities. It creates a false impression to suggest that the districts are doing well.
Secondly, the right hon. Gentleman is totally misinformed if he believes that when I visited Llandudno I suggested that no Government aid would be forthcoming. However, I certainly pointed out to many people who were closely interested that under the Bellwin formula a substantial initial cost would have to be borne directly by the local authority, which would mean cuts in services to meet the expenditure incurred as a result of the flooding.
In addition, 15 per cent.—

Madam Deputy Speaker (Dame Janet Fookes): Order. I believe that this is an intervention, but it very long, and I must ask the hon. Gentleman to resume his seat.

Mr. Davies: May I finish my sentence, Madam Deputy Speaker?

Madam Deputy Speaker: No, because this is far too long for an intervention. The hon. Gentleman may seek leave to intervene again, but not just at the moment.

Mr. Redwood: The hon. Gentleman got into a muddle about whether the money was going to the county or to the districts. I am under no delusion; the money was switched to the districts, and that was exactly my point. I was saying that Aberconwy, which is a district council, had a generous settlement this year and the previous two years, compared with other districts, with counties and with local government across the United Kingdom. I think that the hon. Gentleman has become muddled on that subject and I am sorry that he is so confused.
I am grateful for the hon. Gentleman's clarification of his true position on the generous aid and support that the Government have offered for the floods. However, that was not the impression given in the newspapers in the region after his visit. I am glad that the fact that the hon. Gentleman's remarks were misconstrued in the press has been read into the record of the House.

Mr. Ron Davies: I am grateful to the Secretary of State as I can now complete the point that I was making. I am not responsible for the way in which the newspapers interpret the Government's parsimony. I was saying that the local authority will have to meet the initial cost of many of the works and, under the Bellwin formula, will have to find 15 per cent. of the cost. That is not, in any circumstances, a generous settlement, especially when the cost of the works will have to be met at the direct expense of services being provided by the local authority.

Mr. Redwood: The hon. Gentleman is responsible for the remarks that appear as quotations from him in the newspapers, but I am sure that the House is grateful for clarification of what he really meant on that visit. I am sure that the constituents of my right hon. Friend the Minister of State will be interested to see the record corrected in that way.
The general issue of standard spending assessments was raised by various hon. Members in our short debate. Tourism, visitors and recreation is taken into account in the SSA formula. I have the calculations used to work out the SSAs in the guide that we issued to the House. It is made clear that those calculations include enhanced population—caused by visitor nights and day trips of people coming from 25 miles away or more for business and non-business purposes. The formula contains a genuine attempt to reflect the extra costs to authorities caused by visitors and tourism such as that incurred by Aberconwy. It is partly because of that element of the formula that Aberconwy enjoys an above-average SSA per head compared with other Welsh districts.
I promise that there is an opportunity each year for the formula to be reviewed. It is done in a consultative way in Wales, which I widely welcome. It is up to Aberconwy and its supporters to put their views on the formula to the Welsh consultative council.

Mr. Llwyd: Earlier I referred to the fact that a detailed report was commissioned from experts on the subject. It was made known that the attempt to reflect the current position was not succeeding. That point was made with clarity, but it did not achieve anything.

Mr. Redwood: That is for the consultative council, which includes all the important interests in local government in Wales. Just as Aberconwy can commission a study that proves one thing, so other districts and counties can commission studies that might purport to prove something else. The consultative council and Ministers have to make a different judgment on the balance of the factors in the SSA in order to be fair to the various pressures on different councils around Wales. I am pleased to inherit a system based on agreement with and through the local council organisations as that greatly helps in ensuring a just settlement.

Mr. Murphy: Earlier, I said that we in Wales sometimes received bad things from England. One of the good factors that we could have been granted was what has taken place in the Department of the Environment—a commitment to a proper review of the general SSA system, which is overdue. The SSA system does not take into account long-term unemployment, chronic ill health and other factors. If a review of the system can take place in England, why cannot it happen in Wales?

Mr. Redwood: I have already said that there are opportunities for change and reform in the SSA system in the Welsh way. I am proud to inherit the Welsh model. The review in England is ministerial because that is how things are done in the English system. The review will take account of all the representations made by local government in England. In Wales we can do something similar; we can, through the consultative process, review how satisfactory we find the existing calculation. I invite councils to write to the consultative council in the usual way if they wish to see changes. However, the issue will have to be debated with other colleagues from local government to try to sort out the best way forward.
I believe that we have a good system. I hope that the House will welcome the fact that I have done the decent thing tonight by proposing a capped limit at the original budget and have not attempted to make life more difficult for Aberconwy. I do not think Aberconwy should have been put through a rebilling exercise in the middle of cleaning up after the floods. However, I make it clear to the rest of local government in Wales that it was only the flooding that led me to that conclusion because I know that many other districts and councils worked hard to live within the capping limits. I am pleased that they did that and that was the right thing to do. Without the floods, Aberconwy would have been proposed for a tighter capped limit tonight.
I acknowledge the spirit of co-operation and partnership between my predecessors and local government associations in Wales. That is typified by the arrangements for discussion and agreement on the distribution of resources through the SSAs. I intend to sustain and foster that system because I think that it is right for Wales and right for local government.

Question put and agreed to.

Resolved,

That the draft Council Tax Limitation (Wales) (Maximum Amount) Order 1993, which was laid before this House on 21st June, be approved.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).

TRANSPORT (FEES)

That the draft Department of Transport (Fees) (Amendment) Order 1993, which was laid before this House on 7th June, be approved.—[Mr. Conway.]

Question agreed to.

Madam Deputy Speaker (Dame Janet Fookes): With permission, I shall put together the next four motions relating to statutory instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).

PARALYTIC SHELLFISH POISONING

That the Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) Order 1993 (S.I., 1993, No. 1338), dated 21st May 1993, a copy of which was laid before this House on 25th May, be approved.

That the Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) (No. 2) Order 1993 (S.I., 1993, No. 1413), dated 4th June 1993, a copy of which was laid before this House on 8th June, be approved.

That the Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) (No. 3) Order 1993 (S. 1993, No. 1476), dated 10th June 1993, a copy of which was laid before this House on 11th June, be approved.

That the Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) (No. 4) Order 1993 (SI, 1993, No. 1483), dated 10th June 1993, a copy of which was laid before this House on 14th June, be approved.—[Mr. Conway.]

Question agreed to.

Petition

Mrs. Llin Golding: I wish to present a petition on behalf of a wide-ranging campaign run by students at Keele university in my constituency to combat the rising tide of racism and fascist activity:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled.
Sheweth
That since the establishment of the British National Party Headquarters in Welling there have been at least two racist murders in the neighbouring area and one of the highest recorded incidence of racist attacks in the country; that the report of the European Parliament on Racism found that the British National Party "is an openly Nazi Organisation" and that its leaders' "crimes range from bomb making, organising illegal paramilitary groups, possession of firearms and a series of convictions under Race Relations and Public Order Acts," and that "BNP publications are uninhibited in their racist style and report unashamedly on their members stabbing black people";
Wherefore your petitioners pray that your honourable House do urge the Home Secretary to close the Headquarters of the British National Party at 154 Wickham Lane, Welling.
And your petitioners, as in duty bound, will ever pray.

To lie upon the Table.

Air Incident (Heathrow)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. MacKay.]

Mr. David Wilshire: The matter that I wish to raise tonight is the Department of Transport air accident report 3/93, which is a terrible tale of human error by a ground engineer and what I can only describe as selfish attempts to avoid personal inconvenience by a pilot.
One of the results of all that was that my constituents were exposed to the catastrophic consequence of an aircraft crashing during an emergency landing at Heathrow airport. Mercifully, that did not happen, but if one reads the report, it appears to have been a pretty close run thing.
Although I readily accept that my constituents are not the only people living near Heathrow, they are always probably more concerned than most, because the last crash near Heathrow was at Staines in my constituency and that memory lives on in the collective consciousness of the people whom I represent.
I raise this matter in the House tonight because the report exposes loopholes in the current safety procedures and contains recommendations for Government action to close them. If those recommendations were implemented, the risks faced by tens of thousands of people living near Heathrow would he significantly reduced. I am therefore making no apologies for using every avenue open to an hon. Member to press the Government to take immediate action.
The facts of the matter are complex and highly technical. The report itself runs to 31 pages, plus highly technical drawings and graphs. I will try to summarise them as briefly and simply as I can, but I fear that that will not be easy.
On 7 March 1992, while landing at Heathrow, the pilot of a Lockheed TriStar belonging to West Indian Airways found that he could not get reverse thrust on his No. I engine. The airline's duty ground engineer correctly identified the problem at Heathrow as being caused by the reverser's cowl being jammed. As is permitted by internationally approved maintenance and safety procedures, the ground engineer disconnected the cowl and manually secured it in the in-flight mode. At that time, the relevant regulations permitted that aircraft to be operated in what I can only describe as a botched-up state for up to 10 days. Needless to say, things have changed since that accident.
Having made those temporary adjustments, the ground engineer released the aircraft to fly to Trinidad. Unfortunately, and unknown to that ground engineer, in solving the immediate problem that he faced, he had created new ones which ultimately resulted in parts falling off the aircraft while it was in flight.
Prior to releasing the aircraft at Heathrow, the ground engineer telexed the airline's home base in Trinidad, asking it to carry out further checks on the problem. However, by the time the aircraft reached Trinidad on 8 March, the airline's maintenance staff had been diverted to a much more serious problem on another of its TriStars. As a consequence, the TriStar from Heathrow remained unrepaired and was pressed into service as the replacement aircraft for a Trinidad to New York flight.
The airline's maintenance staff were still distracted when the aircraft returned to Trinidad from New York; that was still on 8 March. It was therefore allowed to fly to Frankfurt without any of the inspections or repairs being carried out. The original ground engineer from Heathrow did, however, carry out further work on the TriStar at Frankfurt and then released it to fly to St. Lucia on 9 March. Shortly after take-off, parts of the cowl fell off, causing damage to the aircraft.
That is the background. Complicated though it is, I hope that I have managed to summarise it accurately.
I now refer to the air accident itself. The TriStar took off from Frankfurt for St. Lucia at 14.35 on 9 March 1992. The air accident report describes what happened next. It states:
As it"—
the aircraft—
climbed through Flight Level 100 there was a thud, accompanied by what appeared to be a compressor stall, and the aircraft shuddered".
A few moments later, as the report explains,
there was a slight vibration and a passenger reported having seen… 'something come off the engine'. About four minutes after the initial accident, the commander shut down the No. I engine.
At that point, as the report makes clear, an immediate landing was not necessary. The report goes on to explain what happened next. It states:
As about 106,000 lb. of fuel would have to be jettisoned to reduce the aircraft's weight to the maximum permitted for landing, a procedure which he (the commander) estimated would take at least 30 minutes, the commander decided to divert to London Heathrow Airport, as this was the company's main European maintenance base.
The commander subsequently carried out checks and concluded, correctly, that the thrust reverser translating cowl had come off and, incorrectly, that there was no other damage. However, the report reveals that the left wing suffered superficial damage while the left horizontal stabiliser suffered severe damage.
At 15.20, the commander reported his situation to air traffic control on the Dover section and obtained clearance to dump fuel over the sea and to divert to Heathrow. The controller asked the commander whether he wished to declare an emergency. The cockpit voice recorder reveals the reply from the commander of the aircraft as
No, I don't think so. We'll be all right.
The report, however, concluded that an emergency already existed despite the statement made by the commander of the aircraft and that that emergency became more severe as subsequent events unfolded. The voice recorder in the aircraft also reveals
that the commander's decision not to declare an emergency was largely based on the inconvenience which would consequently be experienced by him and his crew after they had landed, rather than the condition of the aircraft.
That is a damning thing to find in such a report.
A short time later, the commander became concerned about the way in which the fuel was being jettisoned and therefore stopped the process. Some time later, it was recommenced. A little later again, a passenger reported that there was damage to the left horizontal stabiliser. He had noticed it at the time of the initial incident but believed that it was now becoming worse. Noting this information, and the length of time being taken to jettison the fuel, at 15.51 the commander requested an immediate landing at Heathrow.
Ten minutes before touchdown, the commander was requested to divert to Stansted. The report records that episode as follows:
For operational reasons, BAA would have preferred the aircraft to land at Stansted.
The air traffic controller therefore told the commander:
'there's a request from BAA at Heathrow that you divert to Stansted'.
The report continues:
The commander replied that he would prefer to continue to Heathrow …Recorded flight deck conversation indicated that the commander thought that the reason was because the aircraft had lost part of its engine structure and BAA was concerned about it overflying a large built-up area.
My researches suggest that the report may be covering up an even worse truth—hearing in mind the fact that the truth revealed by the report is pretty shocking anyway. I have been told that Heathrow's airfield operations department asked air traffic control to request the commander to divert to either Manston or Stansted for the following three reasons, and not just for the one quoted in the report. First, if the aircraft's controls and braking system were damaged and if it were overweight, it might need the longest possible runway to stop, and that happens to be Manston. Secondly, Heathrow landings on the day in question were to the west, involving a long approach over densely populated west London. Thirdly, if a runway at Heathrow were closed as a result of the landing, air traffic in much of western Europe could be disrupted; in that case, it would make sense to use a quieter airfield such as Stansted.
At 16.04, when the aircraft was at 4,000 ft and 18 miles from touchdown, it appeared to develop landing gear problems. That took the crew's mind off fuel dumping, which was still going on. As a result, the aircraft reported passing a marker just 7 miles from touchdown—in other words, right over the densely populated area of west London—and at less than 2,000 ft while still dumping fuel. However, regulations prohibit the dumping of aviation fuel at less than 7,000 ft in winter or 4,000 ft in summer.
Happily, a safe but overweight landing took place at 16.10, but not before Heathrow staff had decided to declare a full emergency, despite the commander's refusal to do so. As a result, Heathrow police called in the air accident investigation branch, which produced the report that we are considering tonight.
The report was published on 9 June, some 15 months after the incident. It contains two formal recommendations: first, that commanders be told why requests for diversion are made; and, secondly, that those selecting emergency routes for aircraft in such circumstances should make the avoidance of densely populated areas a primary consideration. I agree wholeheartedly with both those recommendations and ask my hon. Friend the Minister to assure the House that the Government not only accept them but intend to implement them immediately. Nothing less will reassure my constituents.
If my hon. Friend thinks that this is the point at which he can give that assurance and we all go off for a night cap, he is mistaken. Unfortunately, the matter raises other points on which I wish to press him. The first point is the shortcomings revealed in two written answers to my questions about the report. Those answers revealed that copies of such reports are sent to the Library of the House only
in the event of accidents and incidents likely to attract considerable public interest".—[Official Report, 22 June 1993; Vol. 227, c. 99.]

I wonder, therefore, whether my hon. Friend could tell us his definition of "considerable public interest". Does he consider a "considerable" number to be the hundreds of thousands of people who live under the flight path of this aircraft and who had highly flammable aviation fuel dumped on their houses and gardens? I certainly do. Since only three reports were issued in 1991 and only six in 1992, it is not asking much for the Government to deposit copies of all air accident reports in the Library. It would not add much to their work load.
Copies of reports are sent only to those hon. Members who show an interest in the interim bulletin. Perhaps my hon. Friend the Minister could tell us how we are supposed to show interest if we are not told about the existence of an interim bulletin. I should be fascinated to know how we are supposed to do that. Surely it is not beyond the ability of my hon. Friend's extensive and highly paid staff to identify the local Members in such an incident and see that they are properly briefed. As the representative of 70,000 people who were put at risk by this accident, I believe that I have the absolute right to be kept informed. However, I was left to read about the report in the national press several days later.
The second point that concerns me is the Government's failure to notify the local press. I regret having to tell my hon. Friend that, despite the enthusiasm of his publicity department to brief the national media and journalists based many miles from Heathrow, it failed to brief my local newspapers. I hope that that failure was nothing more sinister than an accidental oversight. Kim Chapman, the editor of my oldest local newspaper—the Staines and Ashford News—asked me to tell my hon. Friend that she is absolutely furious. Perhaps in time someone will apologise to her for not sending a copy of the report.
The third point is the need to review the hours worked by and the qualifications of ground engineers. The report revealed that the ground engineer who made the temporary repairs to the aircraft worked on it for 12½hours at Heathrow on 7 March. He then worked on other planes at Heathrow for five hours on the morning of 8 March before flying to Frankfurt and spending a further nine and a half hours repairing the offending aircraft. I make that a total of 27 hours work, plus travel, in only two days. We should not, therefore, be surprised that some errors of judgment occurred.
The report says that the ground engineer
allowed himself to operate beyond his own knowledge of the aircraft and, because of misunderstandings, beyond what was permitted …(he) did not recognise the structural or procedural significance of the disconnections …made in the reverser.
The report also criticises the engineers at the airline's main base in Trinidad for failing twice to carry out the inspection requested by the ground engineer at Heathrow. Does my hon. Friend the Minister agree that those matters and the two recommendations in the report need urgent attention?
The fourth point is the low-level dumping of aviation fuel over London. If anyone stops to think about it, the implications of that are horrendous. Large quantities of highly flammable and toxic liquid were released at very low levels over a densely built-up area. In the circumstances, does my hon. Friend agree that air traffic control should be required to insist on a diversion to


another airfield when such dumping may clearly become necessary? If so, will he issue immediately the necessary instructions to air traffic controllers?
The fifth point is the question of taking action against pilots who wilfully endanger—I choose my words deliberately—life for their convenience or the commercial convenience of their employers. In case that sounds somewhat strong, I quote again from the report. The report says:
the crew decided not to declare an emergency because they believed they would have to undergo medical checks and would not be able to operate the following day.
One needs to let that sink in.
The report also states that the commander requested to go to Heathrow
as all of their facilities were there … Meanwhile the flight engineer consulted Air Canada, the handling agent, who were adamant that the aircraft should come to Heathrow.
The House and the Minister will note the absolute and complete absence of any safety considerations whatever in those two statements. I cannot help wondering whether that constitutes grounds for legal action against the commander and/or the airline. If it does not, I believe that it should and that the law needs changing. I urge the Minister to do something about it.
My last comment is on the misleading comments in the report about the request to divert to Stansted. The report says:
BAA would have preferred (the aircraft) to land at Stansted Airport; the reason was that, had it been necessary to close a runway after the aircraft had landed there would have been less disruption to traffic flow".
As I have already explained, my research reveals that that was but one of three considerations leading to a request to divert and that two airfields were considered by BAA.
I hope that my hon. Friend the Minister agrees that the report, as written, invites us to conclude that Heathrow airport staff—who could well have been my constituents—concerned themselves only with delay and disruption at Heathrow on this occasion. That is grossly unfair because the airport is clearly worried about passenger safety and public risk. I believe that the record should be put right. Will my hon. Friend take steps to have that erroneous impression of Heathrow staff rectified?
Through you, Madam Deputy Speaker, may I thank Madam Speaker for allowing me the opportunity to raise all these issues. I thank my hon. Friend the Minister for giving up a little of his beauty sleep to listen to me and to reply. I hope that I have persuaded him and the House that the matters that I have raised are deeply worrying and potentially raise issues of life and death for those whom I represent.
My constituents and I accept that eliminating all risk for those who live near Heathrow is beyond the scope of all human endeavour. However, we at Heathrow believe that we have the right to expect that everything possible should be done to reduce all the risks to the lowest possible level. The report reveals a catalogue of avoidable risks. Happily, it goes on to identify ways of getting a little closer to the perfection that we all seek. Therefore, I beg my hon. Friend the Minister to act and to act quickly.

The Minister for Transport in London (Mr. Steve Norris): I congratulate my hon. Friend on his good fortune in having obtained this debate on an issue which I know that he takes seriously, and which the Government acknowledge is important. Air accident report AAR3/93 which led to the debate demonstrates clearly the international nature of aviation. The essence of the incident was that a part of one of the aircraft's thrust reversers became detached and damaged the tailplane before falling to the ground soon after take-off from Frankfurt. The aircraft, which was registered in Trinidad and Tobago, diverted to Heathrow, where the company had significant maintenance facilities available. Although the failure occurred over Germany, it was agreed with the German authorities that the investigation would be carried out by the UK's Air Accident Investigation Branch because the aircraft was available for inspection in London.
Although the accident report properly deals largely with the technical problem, it also highlights two important points about air traffic control advice to, and routing of, aircraft in emergency situations. It is understandable that there is public concern to minimise the risk to people on the ground. Safety is always the first priority.
I should make it clear that in the United Kingdom the regulation of civil aviation safety is a matter for the Civil Aviation Authority. Indeed, the Secretary of State's letter to Christopher Chataway setting out the CAA's objectives when he was appointed chairman of the CAA in 1991 makes it very clear that safety is the responsibility of the CAA and that the Government do not intend to interfere in the discharge of those duties.
However, the United Kingdom is an active member of the International Civil Aviation Organisation, whose safety standards are accepted by virtually all countries. The United Kingdom recognises the adherence to these standards by foreign operators and in return British aircraft are accepted overseas. As a major aviation trading nation, the United Kingdom benefits greatly from this reciprocity and, of course, the communities around our airports share in the prosperity generated by international flights in and out of the United Kingdom.
Aircraft accidents in the United Kingdom are investigated by the Air Accident Investigation Branch of the Department of Transport. This organisation is deliberately separate from the CAA so that the regulators are not put in the position of having to judge the effectiveness of their rules and regulations. The AAIB is very widely respected in the aviation community. For instance, its painstaking reconstruction and report of the Lockerbie disaster has drawn worldwide acclaim.
In this case I can assure the House that the CAA has studied the AAIB's report carefully as it does in all such cases. In particular, I can report that the CAA has accepted the AAIB's safety recommendations and that supplementary instructions to air traffic controllers on the handling of aircraft in emergencies will be included in the manual of air traffic services within the next week.
The CAA has given this matter detailed consideration in formulating its response to the safety recommendations. It has been careful to avoid taking away responsibility from the aircraft commander, while giving him all possible assistance in an emergency. It is important not to increase


the pilot's workload at a critical time. It is also important to avoid circumstances which might dissuade pilots from declaring emergencies when they should do so.
In response to the AAIB recommendations in respect of this accident the following instructions and advice will be issued for handling aircraft in an emergency. When a pilot has declared an emergency and stated the aerodrome to which he wishes to proceed, controllers will acknowledge this message. IF the controller is instructed to inform the aircraft that it is required or requested to divert to another aerodrome, the reason for this change should be established. The message, including the reason, will then be passed to the captain and his intentions requested.
It is desirable that aircraft in emergency should riot be routed over densely populated areas. If this is inconsistent with providing the most appropriate service to the aircraft, for example when any extended routing could jeopardise the safety of the aircraft, the most expeditious routing is the one that should be given. Where possible, suggestions of alternative runways or aerodromes which would avoid densely populated areas and be consistent with safety should be passed to the pilot and his intentions requested.
These instructions to air traffic controllers emphasise that the decision on whether to comply with advice or instructions to land at an airport other than his selected diversion lies with the captain of' the aircraft. It is stressed that the captain has ultimate responsibility for the safety of his aircraft. The controller will do everything he can to assist the aircraft commander, but the latter is in the best position to judge the hazard to his aircraft. He has that ultimate responsibility. That is an internationally accepted principle and it is one from which it is difficult to resile.
In this case, the aircraft commander's decision to proceed to London was reasonable, given that he was initially unaware that the separated part had damaged the tail. Also it provided the time to reduce the weight for landing and meant that rectification would be easier. His reluctance to declare an emergency, even when he became aware of the tail damage and asked for an immediate approach into Heathrow, is a matter which has been brought to the attention of the state registry and the international aviation community by the AAIB's comprehensive report. Fortunately, the air traffic controller took the initiative to treat the flight as an emergency, and all facilities were on standby at Heathrow, where the aircraft landed safely. The controller concerned is to be congratulated.
The unfortunate feature of this incident was that the aircraft continued to dump fuel until a few minutes before landing. As my hon. Friend said, it is normal practice for responsible airlines, when fuel must be jettisoned to avoid an overweight landing, to do so above 5,000 ft. From such

heights the fuel dissipates and evaporates. In addition, air traffic control tries to arrange for dumping to occur over the sea, if possible. Regrettably, the aircraft in question had difficulty in jettisoning fuel. In the event. it made an overweight landing, albeit safely.
I have no wish to suggest that this was other than a serious incident—the fact that it was the subject of a formal United Kingdom investigation emphasises this point—but I want to put matters in perspective. Since January 1988 there have been only 11 occasions on which objects falling from aircraft have been reported as causing any damage to property. There are no records of any third party having been injured or killed. This is in the context of about 1·25 million air traffic movements handled by the London air traffic control centre in 1991–92.
My hon. Friend raised one or two other points on which I should like to comment. He correctly identified the questions that have been raised about the role of the ground engineer. He will appreciate that the report did indeed spell out a number of inconsistencies in the way in which the ground engineer operated. He was right to draw attention to the seriousness of the issues raised. These have been highlighted in the report. On the matter of the briefing provided to his local media and to himself, I should say that aircraft accident reports are specialised reports with a high technical content. They are of interest principally to the aviation community. They are preceded, soon after the event, by a bulletin that sets out the essential facts but draws no conclusions.
On the day of publication of the final report a press notice is issued. Copies of AAIB reports are sent to the Library in the event of accidents thought likely to attract considerable public interest. These are normally fatal public transport accidents, such as those at Lockerbie and Kegworth. Our understanding is that numerous copies of this press release were sent to both national and local media. My hon. Friend was kind enough to suggest that his local radio station discovered its copy in the wastepaper basket. I can only say that my Department is clear about the fact that it issued the reports to as many people as possible. If my hon. Friend is concerned, I shall discuss with him afterwards ways in which his keen interest in affairs at Heathrow can be translated into his receiving more regular reports.
This is an important incident, and I am grateful to my hon. Friend for giving me an opportunity to set out some of the background to it.

The motion having been made after Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-eight minutes to Twelve o'clock.